Preamble

The House met at half-past Two o' clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — EDUCATION AND SCIENCE

Assisted Places Scheme

Mr. Flannery: asked the Secretary of State for Education and Science how many schools have now agreed to co-operate in accepting children under the assisted places scheme; and how many children are involved.

The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): A total of 220 independent schools are participating in the assisted places scheme in England. They are contracted to offer a maximum of 5,439 assisted places each year; 4,185 places were taken up in September 1981.

Mr. Flannery: At a time when education cuts are appalling, from the bottom level to the top—the universities and every section of education are struggling to obtain more funds to educate our children properly—does not the Minister suffer some pangs of conscience when the so-called assisted places scheme gives public money to those who least need it—in fact, do not need it at all—thereby taking it away from the vast mass of children and having the bad effect of creaming off children from sixth forms throughout the country?

Dr. Boyson: I am sure that hon. Members on both sides of the House have consciences. We must assess whether the assisted places scheme is successful in doing what was intended. If the hon. Gentleman was present on 16 December when this issue was debated, he would have heard the figures. The parents of one-third of the children who are taking advantage of the assisted places scheme are paying nothing, because of their low incomes. Another third of the children have parents who are in receipt of below-average wages. The hon. Gentleman said that public money was going to those who do not need it, but that is untrue. Only 6 per cent. of the places available under the assisted places scheme are going to the children of families earning 50 per cent. more than the average income. For example, no hon. Member, unless he has a vast tribe of children, would qualify for the scheme.

Several Hon. Members: rose—

Mr. Speaker: Order. The answer was as long as the supplementary question, and both were too long for me.

Mr. Nelson: Despite what the hon. Member for Sheffield, Hillsborough (Mr. Flannery) said, is my hon. Friend aware that many people, including myself, have

personal reasons for appreciating the assisted places scheme that was operated in the past, because it gave them the opportunity to receive a breadth of education which would not otherwise have been available to them? I assure him that he will receive my fullest support and, I am sure, our party's in pressing ahead with the scheme. If he is able to make more financial provision available in the future, that will be additionally welcome.

Dr. Boyson: I welcome my hon. Friend's question, and I am pleased to have his support. The aim of the scheme is to bring bright children, irrespective of their backgrounds, to schools with some of the most splendid sixth forms in the country.

Mr. Dobson: Have any of the assisted places gone to children from Winton House school, St. Leonard's on Sea, whose headmaster, Mr. D. J. Cole, MA, LL.B, Jesus College, Cambridge, has recently written to my hon. Friend the Member for Bedwellty (Mr. Kinnock) threatening to use the Armed Forces against the next: Labour Government should they attempt to do away with independent schools?

Dr. Boyson: That was quite an interesting and unusual question. I have had no discussions about schools in St. Leonard's on Sea or about the headmaster of Winton House school, who obviously is an original, whatever else may be said about him. If the hon. Gentleman hands me the press cutting, I am sure that my right hon. and hon. Friends and I will enjoy reading it.

Village Schools

Mr. Richard Page: asked the Secretary of State for Education and Science how many children are taught in village schools; and how this compares with the figure for 1971.

The Under-Secretary of State for Education and Science (Mr. William Waldegrave): The information requested by my hon. Friend is not kept by my Department. But, taking non-metropolitan English county primary schools with 50 or fewer pupils as a proxy, as most of these schools are in rural areas, there were 59,463 children in village schools in January 1981 compared with 56,860 in January 1975.

Mr. Page: I thank my hon. Friend for his reply. I am disappointed to learn of the reduction. As village schools are, in my opinion—I am sure that my opinion is shared by the majority of hon. Members—the backbone of village life, what will my hon. Friend and his Department do to maintain village schools throughout the length and breadth of the country?

Mr. Waldegrave: I am sure that my hon. Friend is aware that a large part of the change reflects variations in the population. In the rate support grant formula and grant-related expenditure the Government have included a formula for sparseness in population, which makes a considerable difference. Circular 2/81 gives advice on the removal of school places and emphasises the importance of village schools.

Mr. Madel: When considering what to do with surplus schools or classrooms, should not local education authorities bear in mind their responsibilities for implementing the Government's "New Training


Initiative"? Therefore, before taking any drastic decisions on the matter, should they not wait until the "New Training Initiative" is well under way?

Mr. Waldegrave: That is an additional element that local authorities will want to take into account.

Mr. Freud: Does the Minister accept the high quality of teaching in village schools? Will he bear in mind the small demands that graduates at small village schools make on the remedial teaching programme? Will he tell his right hon. Friend the Secretary of State to be most careful before considering the closure of other schools in Cambridgeshire?

Mr. Waldegrave: My right hon. Friend takes great care in those matters. Recent interesting studies, carried out at Cambridge and at Aston university, show the strengths of village schools, although there are problems when the numbers in a school drop below 50.

Sixth Form and Tertiary Colleges

Mr. Beith: asked the Secretary of State for Education and Science whether he will make a statement of his policy on sixth form and tertiary colleges.

The Secretary of State for Education and Science (Sir Keith Joseph): As my hon Friend stated in reply to the hon. Member for Berwick-upon-Tweed (Mr. Beith) on 1 December 1981, all statutory proposals relating to such colleges will be considered on their merits in the light of any objections; our general policies for education, including those set out in the draft circular issued for consultation on 24 November 1981; and all matters relevant to the case.

Mr. Beith: Does the Secretary of State recognise that his decision on Manchester, if he says nothing to supplement it, will be taken as a pointer that the Government would not welcome the development of sixth form colleges? Does he not see that the development of sixth form colleges is one of the ways in which some local authorities can best ensure good provision at sixth form level and combine that provision with further education resources? Does he want them to do that? Would he prefer it if they went back to a selective system?

Sir Keith Joseph: In each case the decision will be made on its merits.

Mr. Haselhurst: Is it not right that local authorities should bring forward proposals that are best suited to their areas and that the Department of Education and Science should be neutral as regards any different arrangements and rely entirely on the merits?

Sir Keith Joseph: My hon. Friend is right. That is what we shall try to do.

Mr. Whitehead: Surely the implication of the Manchester decision is that the Secretary of State overruled his civil servants and majority opinion in the city of Manchester. Will the right hon. Gentleman put the interests of the few before those of the many in Birmingham regarding sixth form college proposals there or, at Sheffield, where a tertiary solution is being chosen? Will he persist in that attitude, even if the education policies of those local authorities are upheld at the forthcoming local elections?

Sir Keith Joseph: I can only repeat that I shall take decisions on the merits of each case, bearing in mind objections and all other relevant factors. I remind the House that the Manchester decision highlighted the policy stated in our 1979 manifesto, that schools of proven worth should be retained. The draft circular reminds local education authorities of that policy and invites them to take account of it when formulating their proposals.

Degree and High Level Courses

Mr. Andrew F. Bennett: asked the Secretary of State for Education and Science whether Her Majesty's Government have any proposals to increase the number of degree and other high level courses being run in higher education colleges and colleges of technology to compensate for the bulge in the population aged 18 years in the mid 1980s and for the reductions in courses in universities and polytechnics.

Mr. Waldegrave: No, Sir. The initiative in providing new courses of higher education rests with the institutions themselves. The Government's expenditure plans provide for the number of students on courses of higher education outside the universities—that is in polytechnics as well as other colleges—to remain above last year's level through to 1984–85.

Mr. Bennett: Is it not crazy that, faced with a considerable bulge in the population that can benefit from those courses, the Government are cutting the number of courses at universities, polytechnics and higher education colleges, yet at a lower level they are providing courses under the youth opportunities programme? Would it not be better to continue to support traditional courses rather than to bring forward alternatives at a lower level?

Mr. Waldegrave: The hon. Gentleman is well aware that the higher education sector cannot be exempt from the pressures to find economies.

Mr. Ward: Is my hon. Friend aware that a post on the higher education board was not advertised nationally? Is he not concerned that that post was not advertised so that the best people, wherever they may be, could reply to the advertisement and not be selected by civil servants?

Mr. Waldegrave: I think that my hon. Friend is referring to the post of secretary of the new Board for Local Authority Higher Education. After long discussions with the local authorities and other bodies we decided not to advertise because of the necessity for speed in setting up the organisation.

Mr. Douglas: How many students in Scotland who have qualifications to fit them for university will be denied places because of the Government's cuts?

Mr. Waldegrave: I shall be delighted to give the hon. Gentleman the figures that we can find. I shall write to him about that.

Mr. Nelson: Will my hon. Friend bear in mind that, far from adding courses, one of the major problems of the past decade has been that many high technology colleges, worthy as they were, have aspired to be universities, and in doing so have done a disservice to the students in both educational and financial terms?

Mr. Waldegrave: Whether or not the difficulty is one of aspiring to be universities, there is a real problem in the


unnecessary diversification of courses. The better application of resources may lead to more students being taken on more economically.

Mr. Whitehead: As the colleges have suffered more in the advanced further education allocations this year than the polytechnics, and as the Government want fewer students at the polytechnics than at the universities, where do they suggest that the students who are thus displaced will go if they cannot go to the colleges?

Mr. Waldegrave: The reason why the colleges other than polytechnics have suffered more in the AFE distribution is that they did not make the savings required in the last two years. It would have been exceedingly unfair to penalise polytechnics because the other institutions had not been as efficient as them.

Adult Education

Mr. Dormand: asked the Secretary of State for Education and Science if he will convene a conference of the major organisations concerned with adult education.

The Under-Secretary of State for Education and Science (Mr. William Shelton): No, Sir. The Advisory Council for Adult and Continuing Education was established to provide a forum for discussion and advice in this important sector of education, and its membership broadly reflects the wide range of interests involved.

Mr. Dormand: Is the Minister aware that if he were to call such a conference he would quickly be told that those in adult education have completely lost confidence in the Government? Does he agree that an essential first step is to make a legal basis for adult education and that the Government's prevarication in that matter is a demonstration of their lack of concern? In a recent debate the hon. Gentleman admitted that adult education played a vital role in a changing technological world. What is he doing to restore the devastating cuts that have been made in adult education?

Mr. Shelton: I agree that the Government believe that adult education plays a vital role. As the hon. Gentleman knows, a review group on the legal basis of further education asked for comments, which were received. We are grateful to those who collaborated. The position is being reviewed and plans will be formulated during this year. The hon. Gentleman is wrong about the financial basis. In the revised expenditure plans for 1982–83 the total is £52·3 million, which is a considerable easement on the plans stated in Cmnd. 8175.

Mr. Greenway: Does my hon. Friend agree that adult education can be a basis for a substantial move forward in training for those who become unemployed? With regard to the legal status, will he confirm, as he said in reply to a Christmas Adjournment debate that I initiated, that local authorities will support adult education as a statutory duty placed upon them? Will the Government do the same?

Mr. Shelton: I am grateful to my hon. Friend, who knows a great deal about those matters. I agree with both points that he made.

Mr. Haynes: Is the Minister aware that the Secretary of State for Education and Science, having ruined the Health Service and industry, is now ruining education?

Why the hell does he not agree to a conference to explain to the people of this nation that we need to put back what has been taken away from adult education?

Mr. Shelton: I am glad to say that the hon. Gentleman is wrong in all his assertions. As I have already said, the expenditure plans announced recently have started to put back what had been taken away.

Mr. Haynes: By you.

Mr. Speaker: Order. We must use parliamentary language. That was not even Welsh language.

Mr. Spriggs: Will the Minister think again about the reply given to my hon. Friend's original question about the convening of a conference with organisations concerned with adult education? Is he aware that if he convenes such a conference he will discover that new students in adult education are finding it impossible to carry on with that education? Is he further aware that if he agrees to such meetings with those organisations he will come face Lo face with the true facts and will see what the economies are doing to adult education?

Mr. Shelton: I personally, and my colleagues, have had meetings with various bodies in adult education, and further meetings are planned. We attach great importance to them. However, the hon. Gentleman is profoundly mistaken. Enrolment in adult education in November 1977 was 1·7 million. In 1980 it was 1·6 million—a drop of only 100,000—and in 1981 the estimated drop is only 3 per cent. Adult education may have suffered a small drop, but it is in good shape. I remind local education authorities that, with the easement in the financial plans that we have announced, there is a strong basis for a viable and continuing adult education programme.

Mr. Squire: Does my hon. Friend none the less recognise that rather less than 0·5 per cent. of the total education budget is now spent on adult education and that one of the best services that he could do for adult education during his term of office would be to increase the percentage of the education budget, let alone other budgets, that is spent in this vital area?

Mr. Shelton: My hon. Friend has a point. One of the results of the cuts in the adult education budget has been an increase in the average hourly fee in adult education, which in 1978–79 was 25p and today is about 51p in cash terms. Nevertheless, the continuing high enrolment shows that adult education is still excellent value for money. I think that that is generally recognised.

Education Standards (Criteria)

Mr. McCrindle: asked the Secretary of State for Education and Science what criteria he uses to determine the standards of education achieved in schools.

Sir Keith Joseph: I take into account not only statistical information on the performance of pupils, but also informed opinion, both national and local, and advice from Her Majesty's Inspectorate.

Mr. McCrindle: I endorse the Government's desire to improve education standards, but will my right hon. Friend confirm that the necessity for the reduction in book supplies by some education authorities and the inability to repair and maintain buildings by others does not stand in the way of achieving the improvement in standards to which he and I would both subscribe?

Sir Keith Joseph: I do not think that they stand in the way, but it is an advantage if local authorities can so conduct their affairs, including their negotiations, that they have the resources allowed for in the recent allocation to improve book provision and to make some headway with maintenance.

Mr. Spearing: Does the Secretary of Sate agree that there is a fundamental difference between standards of education and standards of measurable scholastic attainment? As the Government place so much emphasis on the latter, particularly on O-level and CSE results, what is he doing about measuring the former?

Sir Keith Joseph: I think that in all our statements we provide that, so far as is practicable, assessment should go far wider than examination results, although they are an indispensable ingredient.

Mr. Peter Bottomley: Does my right hon. Friend agree that, instead of paying too much attention to merging CSE and O-level examinations, he would do well to encourage schools and others in education to find ways of giving proficiency tests to those not expected to pass CSE or O-level examinations, as they could probably gain most from having targets set for them?

Sir Keith Joseph: I agree with my hon. Friend that the substantial percentage of pupils who are not particularly academically inclined are not at present receiving a fair deal. In collaboration with the education authorities and the teachers the Government will do all that lies in their power to help to improve the deal that those pupils receive.

Mr. Dobson: Besides relying on his own elitist Old Harrovian prejudices, of which he is usually so proud, will the Secretary of State guarantee not to interfere with the independence of Her Majesty's Inspectorate's assessment of educational standards and that its report will be published this year, as it was last year, and soon?

Sir Keith Joseph: I make no apology for a prejudice in favour of a better deal for those receiving the least benefit from our school services at present, despite the efforts of a large number of devoted and effective teachers. The inspectorate's report is not yet complete. I shall make a decision about its publication when I have seen it.

Education Act 1981

Mr. Cockeram: asked the Secretary of State for Education and Science when he proposes to introduce an order to bring the Education Act 1981 fully into force.

Dr. Boyson: It remains the Government's intention to implement the main provisions of the Education Act 1981 in the early part of the academic year 1982–83 and to make commencement orders during 1982 for this purpose. One commencement order has already been made bringing section 14 of the Act into force from 5 January this year.

Mr. Cockeram: Will my hon. Friend be issuing further guidance notes to local authorities on this matter? If so, when does he expect to do so?

Dr. Boyson: We hope to issue a second circular well before Easter. This will give guidance on the assessment of children with special educational needs, the making of statements on those needs and the arrangements for parental involvement in all those procedures.

Class Sizes

Mr. Newens: asked the Secretary of State for Education and Science if it is his policy to reduce class sizes over the course of the next three years; and if he will make a statement.

Sir Keith Joseph: The Government's expenditure plans allow for the overall ratio of pupils to teachers to be maintained broadly at the current level, which is the best ever. Class sizes depend on decisions by local authorities and head teachers about the deployment of teachers as well as on pupil-teacher ratios.

Mr. Newens: Does the Secretary of State agree that it is an appalling waste of skill, and a false economy, to cut the numbers of teachers employed, particularly as those who become unemployed must then be supported out of public funds? Does he further agree that it would be desirable at this stage to reduce the size of classes, particularly in sixth forms, where falling rolls have a devastating effect in reducing the choice of subject?

Sir Keith Joseph: I cannot agree that it is right for the Government to ignore the number of pupils in schools when assessing the number of teachers who should teach the falling number of pupils. We should seek a balance between the interests of taxpayers and the need to make further progress in reducing class sizes.

Sir William van Straubenzee: In these matters is not a measurement purely in terms of class size thoroughly unrealistic? Is not the ratio of those who teach to those who are taught the key factor? Is there not therefore much encouragement in what my right hon. Friend said in his original answer?

Sir Keith Joseph: Yes. I thoroughly agree with what my hon. Friend, with all his experience, has said. The deployment by the head teacher of the teachers available, in some cases to cope with small remedial classes as well as with larger classes for those not requiring remedial lessons, must also be taken into account.

Mr. Christopher Price: Is the Secretary of State aware that some very useful information about the reduction of class sizes was given in last year's HMI report, which his predecessor published so that he could be examined by the Select Committee about the facts in it? Is the hon. Gentleman further aware that his statement today that he has it in mind not to publish this year's report, presumably because it may contain embarrassing facts that he does not wish the public to know, runs clean against the pledge given by the Leader of the House that all Ministers would be as helpful as possible to Select Committees in providing all the information at their disposal? Finally, is he aware that when he comes before the Select Committee on 10 February, if the report is not public certain conclusions may be drawn?

Sir Keith Joseph: I am glad to pay tribute to my predecessor, who took the pioneering step of publishing—voluntarily, and under no pressure from the House—the report of Her Majesty's Inspectorate. No Minister in the Labour Government apparently thought of or acted upon any such willingness to lay the facts and the opinions of HMI before the House. I look forward to my next session with the hon. Gentleman's Select Committee, whether or not the report is available or published by that time.

Sir Nicholas Bonsor: Does my right hon. Friend agree that one of the problems in schools arises from the fact that when the best teachers are promoted to be heads of departments they cease to teach and become administrators? Does my right hon. Friend also agree that something should be done to rectify that?

Sir Keith Joseph: I agree with my hon. Friend. I hope to take an early opportunity to emphasise the point that he has just made.

16 to 19-year-olds

Mr. Haselhurst: asked the Secretary of State for Education and Science whether he proposes to take further initiatives regarding educational opportunities for the 16 to 19 years age group.

Mr. William Shelton: My right hon. Friend attaches great importance to the education of the 16 to 19 age group. A number of further initiatives are planned, including the development of a new pre-vocational qualification for 17-year-olds in both schools and colleges. An announcement will be made about this shortly.

Mr. Haselhurst: In the light of the important initiative on training announced by the Government before Christmas, is it not extremely appropriate and urgent that steps should be taken—as a balance on the educational side—to secure the more wholehearted attendance of young people at school up to the age of 16 and their continued attendance after that age?

Mr. Shelton: I entirely agree with my hon. Friend, who I know is interested in these matters. Both the new pre-vocational qualification and the youth training scheme are complementary and in no way conflict.

Mr. Frank Allaun: Does not the Minister think it far better for most youngsters to continue their studies from 16 to 19, than to be out of work? As many working class parents cannot afford to allow their children to do that, will the hon. Gentleman introduce a scheme of grants for such children that is far higher than the child allowance scheme? Indeed, that is Labour Party policy.

Mr. Shelton: I entirely agree with the hon. Gentleman. It is our wish that more youngsters should stay on at school after 16. I am glad to say that, for various reasons, about an additional 10 per cent. are staying on already. I am aware of the problem of grants, but I remind the hon. Gentleman of the discretionary educational maintenance allowances that can be made by local authorities to help those in need.

Mr. Crouch: Following the supplementary question of my hon. Friend the Member for Saffron Walden (Mr. Haselhurst), may I ask my right hon. Friend to keep in touch with the Secretary of State for Employment, who these days is spending millions on a form of education for school leavers—training? Does he not feel that his Department should be able to make a greater contribution to the education of those school leavers by means of opportunities in tertiary education?

Mr. Shelton: I reassure my hon. Friend that there is close collaboration between the Department of Employment and the Department of Education and Science. He will recognise that, to put it bluntly, the education service is supplying the education for the YOP and the youth training scheme.

Mr. Foster: Does not the Minister recognise the need to co-ordinate the education and training of 16 to 19-year-olds, be they in school, college, at work or unemployed? Is it not remarkable that the Department of Education and Science, to the dismay of the whole education service, seems to have opted out of the area for which, just a few minutes ago, the Secretary of State said he had great concern—the education and training of the less able pupils?

Mr. Shelton: The distinction between training under the Department of Employment and education under the Department of Education and Science is a matter for the machinery of Government and not for me. However, collaboration is working not too badly at present and I have every confidence that with the youth training scheme on the one hand and the new 17-plus, or certificate of prevocational education, on the other, we shall see these two marching in step and complementing each other.

Inner City Areas

Mr. Spearing: asked the Secretary of State for Education and Science if he is satisfied with the cost effectiveness of education in inner city areas.

Sir Keith Joseph: Many of the local authorities concerned are spending at or close to their grant-related expenditure assessments for education, which take account of the socio-economic problems of inner city areas. A few are spending far above their GRE. The report by Her Majesty's inspectors in 1980 on the biggest of these, the Inner London Education Authority, suggests to me that savings could be made in some cases without damaging the quality and range of education offered.

Mr. Spearing: The Secretary of State has said that expenditure can be reduced without damaging the quality of education in inner London, but he and his predecessors have consistently refused to set out those reductions. Will the right hon. Gentleman slate them now, or give an undertaking that he will do so in the future before, through his right hon. Friend the Secretary of State for the Environment, requiring the ILEA to reduce its expenditure in real terms on any part of its service?

Sir Keith Joseph: No. I shall not do the ILEA's job for it. In recognition of the problems that inner London faces, our assessment allows for 30 per cent. more expenditure by the ILEA than the average urban education authority, but the ILEA is spending 40 per cent. above that 30 per cent. Therefore, it is abundantly clear that the 7½ per cent. economy that we are seeking from it is moderate and well within its power without doing damage to its educational quality or range, taking into account the ILEA's excessive spending above the level that has been judged suitable for its special problems.

Mr. Silvester: Is my right hon. Friend aware that this very day Manchester city council, which covers the inner city of Manchester, is employing headmasters without schools at an enhanced salary, because they are being appointed for schools that cannot possibly operate until he has given approval to the scheme before him? Is that not an example of a lack of cost effectiveness, is it not illegal and will he do something about it?

Sir Keith Joseph: The advice that I have been given is that the Manchester education authority has made these


appointments and arrangements for pay conditional upon the decision to be made by me on its new proposals, when the objection and consideration periods are over. On that understanding, and on that understanding only, I understand that its action is not in itself illegal. That is a quick reaction to the information that I have been able to gather since I was told what had happened.

Mr. Eastham: Is it not true that while Manchester city council has been waiting for many months for a satisfactory conclusion and a decision from the right hon. Gentleman, he has been holding secret meetings with Conservative Members at the Tory Central Office? Has the right hon. Gentleman held such secret meetings? If so, is that proper as, in a sense, he is in a quasi-judicial position?

Sir Keith Joseph: It was, Mr. Speaker, no doubt wrong of me to answer a supplementary question about Manchester following a question about the ILEA, but I am paying for it now. Yesterday, at the Central Office, I was handed a letter after the information about which my hon. Friend has just asked had been made available to the press.

Overseas Students

Mr. Teddy Taylor: asked the Secretary of State for Education and Science how many overseas students enrolled in British universities this session; and what was the comparable total five years ago.

Mr. Waldegrave: Provisional estimates are that 15,000 new overseas students entered the universities of Great Britain in 1981–82 compared with 17,700 in 1976–77. Both figures include students domiciled in European Community countries, who are now charged home fees.

Mr. Taylor: Are not those figures reasonably encouraging, in view of the fears voiced about the effect of the new fees charged? Will my hon. Friend at least look at the ridiculous anomaly whereby we now charge all Commonwealth and foreign students full-cost fees of up to £6,000 a year, while all students from the EEC and the French overseas territories get an automatic subsidy of about £3,000 from the British taxpayer? In view of these encouraging general figures, will the Minister sort out this rather silly anomaly?

Mr. Waldegrave: I agree with my hon. Friend that the overall drop is encouragingly small. The Government are studying the Melbourne communiqúe, which referred to student mobility. A further encouraging sign is that students from the developing Commonwealth are still increasing, probably as a result of Government-to-Government scholarship schemes.

Mr. Robert Hughes: Was the Department of Education and Science consulted about a Home Office decision to refuse to renew visas for overseas students if they had been provided with short-term accommodation by local authorities and given a rent rebate? Is that not scandalous? What representations will the Minister make to try to get that decision reversed?

Mr. Waldegrave: I shall have to ask the hon. Gentleman to give me details of the case, and I shall reply to him later.

Mr. Rhodes Jollies: Is my hon. Friend aware that there is evidence that certain universities are dropping their

standards in order to maintain the level of overseas students? Is not that the worst of all possible worlds at present?

Mr. Waldegrave: I have heard those suspicions voiced. I am not convinced that that is happening yet, but we shall keep a close eye on the position. I have no doubt that universities will be loth to drop standards.

Mr. Whitehead: A 21 per cent. drop in enrolments this year is described by the Minister as "encouragingly small". At which figure does he become discouraged? What would he say is suffering most as a result of this fall in numbers—the institutions to which the students would have gone and the home students still there, or our relations with the countries from which the overseas students would have come?

Mr. Waldegrave: I am afraid that the hon. Gentleman, like many arts graduates, is not sufficiently numerate. There is not a 21 per cent. drop. The provisional figures show that there may be about a 3 per cent. drop this year.

Absences from School

Mr. Heddle: asked the Secretary of State for Education and Science what are the latest available figures for the number of secondary school children who are absent on any one day from school without a reasonable explanation.

Mr. William Shelton: A national one-day survey in 1974 revealed that in maintained middle and secondary schools in England and Wales 87,400 pupils—2·2 per cent. of the total—were absent from school without a known good reason.

Mr. Heddle: Does my hon. Friend agree that hard core truancy can be the seed-corn of juvenile crime? Is he not, therefore, alarmed that in some inner city areas truancy is as high as 25 per cent.? Does he agree that the existing measures may not be adequate or serve as a suitable deterrent? Will he consider looking further into the matter?

Mr. Shelton: I know my hon. Friend's interest in this matter. In 1979 there were 3,700 prosecutions in England and Wales, mostly for truancy. The education welfare service is responsible and I hope that local education authorities will make sure that it plays a responsible part.

Mr. Skinner: Can the Minister, or one of his colleagues, supply the necessary information about how many Members of Parliament are absent on any given day without reasonable explanation? I am certain that the figures will show that the absentee rate is higher here than it is in the schools.

Mr. Shelton: To judge from the usual state of the Benches opposite, the hon. Gentleman can supply that information better than we can.

Mr. Stokes: In view of the connection between truancy and crime, has my hon. Friend noticed that, unfortunately, of those who cannot read, many become criminals from the age of 15 onwards?

Mr. Shelton: I accept that my hon. Friend may have a point. I have no knowledge or information on the correlation.

University Grants Committee

Sir William van Straubenzee: asked the Secretary of State for Education and Science on how many occasions in 1981 he has met the chairman of the University Grants Committee.

Sir Keith Joseph: After assuming office in September, I had four meetings with Dr. Parkes in 1981.

Sir William van Straubenzee: At those meetings does the constitutional position remain that neither my right hon. Friend nor his Ministers intervene in detailed decisions by the University Grants Committee? If that is right, does it not show that those voices in the university sector that are baying for the abolition of the UGC are speaking against the very interests of the universities?

Sir Keith Joseph: What my hon. Friend said in the first part of his question is true. In no way have I or my hon. Friends sought to intervene in the decisions of the UGC.

Mr. Sheerman: When the Secretary of State next meets the chairman of the UGC will he take up with him the results of the UGC decisions in respect of the technological universities, including Bradford university, on which the future wealth of the country depends? Is he aware that in the case of Bradford a cut of one-third in the budget means the closure of nine to 14 technical departments and the decimation of the infrastructure of higher education in West Yorkshire? Will he give that matter serious priority?

Sir Keith Joseph: I shall still not intervene with the chairman of the UGC. It is a fact that the technical universities have fared differently. Some have come off with light cuts, and others with more. The university of which the chairman of the UGC was vice-chancellor before he became chairman of the UGC has fared badly.

Oral Answers to Questions — PRIME MINISTER

Engagements

Ql. Mr. Beith: asked the Prime Minister if she will list her official engagements for Tuesday 19 January.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others, including one with the Netherlands ambassador. In addition to my duties in the House I shall be having further meetings later today.

Mr. Beith: Is the Prime Minister aware of the enormous public concern that has arisen over sentencing in rape cases, following the failure of the Crown to proceed in the recent Glasgow case and unsympathetic police interrogation of victims, as was shown in a television programme last night? Will she add to the welcome statements of the Lord Chancellor and the Lord Chief Justice an indication of the seriousness with which the Government view the matter? Will she say whether she is prepared to carry out a review of the application of the law in rape cases and whether she will encourage police authorities to set up special units to deal with this odious crime?

The Prime Minister: I am grateful to the hon. Gentleman for raising this matter. It is vital that women should have confidence in the ability of the law to protect

them against this violent, detestable and—I use the hon. Gentleman's word—"odious" crime, and to ensure that persons are found guilty should they commit it.
I share the welcome that the hon. Gentleman gave to the Lord Chief Justice's point on sentencing for rape. The hon. Gentleman will know that he said forcefully that rape was always a serious crime and, except in wholly exceptional circumstances, called for an immediate custodial sentence.
I also share the hon. Gentleman's concern about certain matters that were shown on television last night, and I understand that the relevant police authority accepts the warranted criticisms about the ways in which those cases were handled. Beyond that, it is best to leave the Lord Chancellor to deal with these matters, and for the Home Secretary to deal with police questioning, because there has been advice and that will be reviewed. We should leave the Lord Chancellor to deal with these matters in his inimitable and definitive way.

Sir Paul Bryan: Will my right hon. Friend find time today to consider the circumstances in which a Conservative Secretary of State has approved the findings of the Monopolies and Mergers Commission, which insulate our lucrative retail banking system against competition and at the same time allow banks to use their profits to buy banks abroad in countries that believe in competition? In any event, has not this inquiry raised subjects of such importance that they should be decided by the Cabinet and not by some commission?

The Prime Minister: Clearly there was room for more than one view on the difficult issues raised by the Monopolies and Mergers Commission's consideration of the bids for the Royal Bank of Scotland. The commission was itself divided on both bids. The decision rests not so much with the commission as with my right hon. Friend the Secretary of State for Trade. It is a quasi-judicial decision. He can consult other colleagues about it, but the final decision is his.
I understand that the commission did not believe that there would be any substantial contribution to competition in United Kingdom banking from either merger. There has been a considerable increase in competition from the number of banks that have come into this country. We welcome them into this country and I am aware that some of our banks have gone into the banking business overseas and taken over other banks. I emphasise that this decision applies to this particular case only and that the structure of banking in this country must not remain frozen.

Mr. Foot: As it appears that the country and the House may soon be confronted with the terrible total of 3 million unemployed, may I ask the right hon. Lady to ensure that the statement on this matter is made to the House next week, when the figures are to be announced? Will she also tell the House what changes in Government policy she proposes at the same time?

The Prime Minister: The statement will be made in the usual way, as it is always made, in the morning, from the Department of Employment, giving very full details of the figures. I shall be here, as usual, to receive questions.

Mr. Foot: As the right hon. Lady has indicated that the figures may be passing this terrible total, will she arrange for the statement on such a major matter to be made in the House? Will she also take into account the fact that, 


speaking a week or two ago on this question, she said that there were some economic measures affecting these matters that she would like to have carried through were it not for Parliament restraining her? What were those measures? Would they have added to the total unemployment figures?

The Prime Minister: No, I have no present intention of changing the arrangements for making that statement. The right hon. Gentleman will be very much aware that on each occasion when the unemployment figures have risen—and they also rose, tragically, in his time, although not to the present levels—the statement was made in the same way, by announcement in the morning through the Department of Employment. The statement will continue to be made in that way. I have no other statement to make about this matter. As the right hon. Gentleman knows, there has been a major statement about help for work and training for young people. Some of those provisions came into operation on 2 January. Further changes are due to be made in the job release scheme in February, and the whole training scheme will come into operation gradually over the coming months and years.

Mr. Viggers: asked the Prime Minister if she will list her official engagements for Tuesday 19 January.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Viggers: Has my right hon. Friend had an opportunity today to read press reports of plans approved by the Japanese Ministry of Trade and Industry for that country to take a massive leap forward in technology based on the increased use of computers and robots? Does she agree that in this country too much of our thinking is rooted in preserving the industrial practices of the past and that the way ahead to greater prosperity and greater employment in Britain is for all responsible leaders to encourage change, innovation and flexibility?

The Prime Minister: I agree very much with what my hon. Friend has said. It is essential for the prosperity of British industry, and for the future prospects for jobs, for British industry to adopt the very latest technology and to be ahead in doing so. It is notable that those countries that have clung to outdated working practices and outdated technologies have the higher levels of unemployment; those that have been among the first to embrace new technology have the lowest levels of unemployment and high measures of prosperity.

Dr. Owen: How much is it now envisaged will be spent on the Polaris rockets? Will the Prime Minister confirm that this sum will allow the life of the Polaris missile to be extended into the year 2000? Would not that be the best option, rather than proceeding with the extremely expensive Trident missile?

The Prime Minister: I am not quite sure which aspect the right hon. Gentleman is getting at. The Polaris weapon is being re-motored, as he knows. From time to time changes have to be made in this weapon system, and re-motoring is now being undertaken until the Trident is due to come into service. There is also another matter, about which the right hon. Gentleman will know. The cost of Chevaline was £1,000 million. These steps will extend the life of the Polaris and the submarines until Trident—which is a much more powerful weapon—is due to come into service later.

Mr. Hordern: Has my right hon. Friend noted the figures published yesterday, which show that the numbers employed in the Health Service have increased by 67,000 in the last two years, and that the numbers employed in central Government have increased by 38,000 over the same period? Is my right hon. Friend's policy of reducing waste in the public sector and eliminating overmanning going according to plan?

The Prime Minister: I know that my hon. Friend's figures are absolutely impeccable, as usual, and that he will have taken them from some particular Government document. During that period the numbers in the Armed Services rose by some 20,000; the number of nurses rose by 21,000 and the number of doctors rose by 1,000. I am sure that my hon. Friend will approve of those increases. The numbers in the Civil Service bureaucracy, over the period that my hon. Friend mentioned, have dropped by 40,000. They have now dropped by 52,000. As we take out the area health authorities, the number of bureaucratic jobs in the Health Service will further be reduced.

Mr. Conlan: Will the right hon. Lady take time today to consider the announcement made by Marconi Radar yesterday to the effect that 700 people are to lose their jobs as a result of cancellation of contracts by the Ministry of Defence for the GWS-25 tracker radar? As the lightweight version is intended as a replacement, will she put an end to the indecision of the Ministry of Defence over the rival bids of a Dutch company and Marconi, so that the work can go to Marconi and thereby reduce and mitigate the full effects of these redundancies?

The Prime Minister: This question arises from time to time. We try to buy British, as far as we possibly can, commensurate with efficiency in British industry and with suitability for the task under consideration. The hon. Gentleman must take up the precise decision with my right hon. Friend the Secretary of State for Defence.

Mr. Neil Thorne: asked the Prime Minister what are her official engagements for 19 January.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Thorne: I welcome the Government's determination to encourage concessionary fares for elderly people. Will my right hon. Friend take time today to consider again the possibility of granting tax relief to companies giving their staff season tickets for public transport? This would seem to be a much more sensible way of providing subsidies for public transport than the present ad hoc system.

The Prime Minister: As my hon. Friend will know, where employers buy or help with season tickets for employees, the employers will secure tax relief for that purpose, but there will be a charge, if it is a gift or a partial gift, on the tax of the employee. At present we have no plans to change that. It would be extremely expensive if tax relief were to be given for all travelling expenses, and no Government have embarked upon that. It is a personal choice where one lives, and that is one of the reasons why the present position has been adopted.

Mr. Les Huckfield: While the Prime Minister is talking to her right hon. Friend the Secretary of State for Transport about concessionary fares, will she also try to find time to interest him in the railway dispute? Will she


try to get through to him the fact that pay and productivity issues in this dispute are entirely separate and distinct—[Interruption.]—as is amply evidenced and documented in the proceedings of the Railway Staffs National Tribunal and the Advisory, Conciliation and Arbitration Service? Will the Prime Minister also get the Secretary of State for Transport to appreciate that since it is the British Railways Board that has broken its agreement—[HON MEMBERS: "Rubbish."]—and since it is the British Raiways Board that broke off the productivity talks, the only way to settle this dispute is for the British Railways Board to pay the 3 per cent?

The Prime Minister: I do not accept what the hon. Member has said. I believe that the parties are still with ACAS. The hon. Member will remember that it was as a result of the good services of ACAS that that arrangement was reached earlier in the year, and I believe that it is right that ACAS should resolve it. In the meantime, I call the hon. Member's attention to what Mr. Terry Duffy said about the strike in an article in one of the Sunday newspapers this week. Speaking about this particular strike, he said:

Their strike action has caused suffering to thousands of my members. Many factory workers, unlike office workers, do net get paid if they cannot get to work.

Mr. Cyril D. Townsend: Will my right hon. Friend be discussing with the Chancellor of the Exchequer the call from a large section of British industry and many on the Conservative Benches for Government support for carefully costed capital projects in labour-intensive industries? Would not such help be a constructive and traditionally Conservative way of encouraging the free interprise system and getting the economy expanding rather faster than is at present envisaged?

The Prime Minister: Yes, and my hon. Friend will have heard me say many times that we have also to look at the total of expenditure. We have to get the total of expenditure either from taxation or from borrowing That is really the only way to do it, Therefore, we must look at the total—[AN HON. MEMBER: "Print it".] Printing is a Labour device. I may say that it is usually overmanned as well. Many of us wish to make certain that current expenditure is kept as economical as possible and that wage claims are kept as moderate as possible so that there may thereby be room for that capital expenditure that my hon. Friend and I both want.

Questions to Ministers

Mr. Tam Dalyell: On a point of order, Mr. Speaker. You have often complained about hon. Members simply tabling questions on the Prime Minister's engagements and about the lack of substantive questions. I am sure that the Prime Minister put a good deal of work into her answers to the questions from my hon. Friend the Member for Stockport, North (Mr. Bennett) and myself, which relate to substantial issues, and of which she was warned. Will you reflect on any guidance that you might give about whether it is right to complain about the Prime Minister simply answering questions of which she has received no warning, rather than questions that have been tabled in advance? I make no personal complaint on this occasion, because my hon. Friend's question would have been called before mine, but the matter involves an issue on which the House might care to reflect.

Mr. Speaker: May I say that the House has the remedy in its own hands. Hon. Members put down these open questions, not me. I deplore the fact, and I have made it quite clear, that Prime Minister's Question Time is not devoted to substantive questions of which notice has been given to the House. I am sorry that the hon. Gentleman's question was not reached.

Mr. Churchill: Further to that point of order, Mr. Speaker. Could you not use your own good judgment to call only one question when there are a number of identical questions on the Order Paper?

Mr. Speaker: I have given a great deal of time to considering ways in which I might help the House in this connection, such as trying to bracket together a number of questions. However, I am the servant of the House, and it has been made quite clear to me by the very fact of the Order Paper itself that the House is prepared to continue with the present system.

Mr. Arthur Lewis: Further to that point of order, Mr. Speaker. I understood you to say

that you have given, or are giving, consideration to the matter. Might I suggest that in that consideration you bear in mind the fact—and it is a fact—that for very many years Mr. Speaker would not permit a supplementary question unless that supplementary had a bearing either on the original question or on the reply? With great respect, may I say that the right hon. Member for Plymouth, Devonport (Dr. Owen), who reneged on the Labour Party, raised a question that had nothing to do with the original question or the ministerial reply. With respect, I am sure that had it been me or my hon. Friend and some other Speaker, that Speaker would have ruled the question out of order. I suggest that we should get back to the time when supplementary questions had to relate to the original reply or to the supplementary.

Mr. Speaker: This is not the first time that I have had reason to be obliged to the hon. Member for Newham, North-West (Mr. Lewis)—and I am obliged. I agreed with what he said, until he came to the part about himself and his hon. Friends. However, the House should realise that the open question changes the character of Question Time. The right hon. Member for Plymouth, Devonport (Dr. Owen) missed out the words
Would the Prime Minister, in the course of her busy day, consider".
That was all.

Dr. David Owen: So did the Leader of the Opposition.

Mr. Speaker: That little formula makes almost anything permissible. A former Prime Minister is present, and the Prime Minister herself.

Mr. James Callaghan: Two former Prime Ministers are present.

Mr. Speaker: I apologise. We have two former Prime Ministers here—and one missing. If the House had fewer open questions, it would be possible, as the hon. Gentleman rightly says, to deal with substantive questions.

Yorkshire Ripper (Investigations)

The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I should like to make a statement on the review of the Yorkshire Ripper case carried out, at my request, by Mr. Lawrence Byford, one of Her Majesty's inspectors of constabulary.
I asked him to report on any lessons which might be learned from the conduct of the investigation and which should be made known to police forces generally. Mr Byford was assisted in his review by the external advisory team set up in November 1980. He was also able to take account of views put to him about this tragic case by relatives of the victims, who greatly appreciated the opportunity to voice their misgivings.
I have now received and considered Mr. Byford's report, and I am extremely grateful to him for it. I should like to let the House know of its main conclusions and recommendations. A more detailed summary has been placed in the Library.
It is apparent from the report that there were major errors of judgment by the police and some inefficiencies in the conduct of the operation at various levels. In particular, excessive credence was given to the letters and tape from a man claiming responsibility for the series of murders and signing himself "Jack the Ripper". Another serious handicap to the investigation was the ineffectiveness of the major incident room which became overloaded with unprocessed information. With hindsight, it is now clear that if these errors and inefficiencies had not occurred Sutcliffe would have been identified as a prime suspect sooner than he was. Mr. Byford's report concludes that there is little doubt that he should have been arrested earlier, on the facts associated with his various police interviews.
I remind the House that the Ripper case gave rise to the largest criminal investigation ever conducted in this country, imposing a great strain on all concerned. It would have been surprising if in this uprecedented situation there were no mistakes. What we now have to do is to respond constructively to the considerable experience gained in the course of it in order to ensure that future investigations of crimes such as this are carried out as effectively and quickly as possible.
I turn, therefore, to the lessons for the future and to the recommendations made by Mr. Byford. As will be seen from the statement in the Library, they deal comprehensively with the management requirements of the investigation of a series of major crimes, the training of senior detectives and personnel working in major incident rooms, the command of investigations involving a number of crimes which cross force boundaries, the harnessing for such investigations of the best detective and forensic science skills in the country, and the use of computer technology.
I welcome Mr. Byford's recommendations on those matters. They are already being followed up with representatives of the police service. They provide valuable guidelines for the operational conduct of very large criminal investigations in police forces generally. They will require a constructive commitment at all levels of the police service.

Mr. Roy Hattersley: First, I thank the Home Secretary for making this statement today. It contains matters that the House will consider to be both distressing and distasteful, but, in the light of the report, discussion of them today is unavoidable.
The House will note—I quote from the summary of the report—that
the vast majority of the officers involved in the case worked diligently and conscientiously.
We must all take comfort from that. We also take comfort from the fact that the report makes no attempt to protect the individuals involved or to excuse the failures of the service. However, that being said, some facts are tragically inescapable. The summary of the report, a copy of which the Home Secretary was kind enough to give me in advance, makes three matters clear. There was inefficiency and serious error and the incident room involved was ineffective. Many senior officers proved incapable of the efficient discharge of the duties that were placed upon them.
The Home Secretary quotes the summary as to the results of those failures. He said that Peter Sutcliffe should have been recognised as the prime suspect much earlier and should have been arrested much earlier. In the light of that, I must ask the Home Secretary a stark question Is it not a fact that those failures resulted in the deaths of women who should have been saved from the awful fate that overcame them?
Since the answer to that question must, I deeply regret, be "Yes", I ask the Home Secretary to take three courses of action that are necessary for the re-establishment of confidence in the police forces of Britain. I ask him to promise three things. First, he promised in his statement to follow up—those were his words—the criticisms of the police force contained in the report. We need far more than that from him today. We need a much stronger statement of his intention. Will he promise the House here and now to take whatever action is necessary to remedy the faults that the report describes?
Secondly, we need assurances from the Home Secretary—which I ask him now to give—that he will immediately take whatever action is necessary to avoid similar errors in the detection of serious crime in police forces outside West Yorkshire. I fear that the report will reverberate throughout Britain and undermine confidence in other areas as well as in the one to which the report refers.
Thirdly, what action is being taken about the officers who were clearly responsible for the errors that prolonged the tragedy? Are they still in charge of the investigation of serious crime within their area? If that were the case, the House and the country would regard it as wholly intolerable.

Mr. Whitelaw: I am grateful to the right hon. Gentleman for recognising that it was important that an oral statement should be made to the House. I took the view, somewhat exceptionally in such cases, that it was essential that I should do so. I also took the view that it was quite essential that I published in the Library a summary of the report which held back nothing and which did not try to cover anything up. That was most important in all the circumstances and whatever may be the other criticisms of what has happened, that will be recognised as a fact.
The right hon. Gentleman asked me a question that can never wholly be answered, but from what I said I must


accept that if Sutcliffe had been arrested earlier there would be those who were subsequently killed who would not have been. One cannot avoid that. With the benefit of hindsight, one must accept it.
I turn to the other points that the right hon. Gentleman makes about the future. First, he asked that we should take whatever steps are necessary to improve the position in the future. This morning I discussed the report with the leader of the West Yorkshire council and with the appointed members of the police authority. I am grateful to them for having come to London today to discuss the matters with me. They will have a meeting with their police authority. Together we are determined to learn all the lessons from the failures and we are determined to ensure that the efficiency of the force in such matters is improved in the future. We are all perfectly clear about that and we all accept immediately the responsibility that that places upon us.
As to the need to ensure that the lessons are learnt by other forces, it was right to supplement the report made internally by the deputy chief constable with a report by the inspector of constabulary, because there are wider lessons to be learnt for the police service as a whole. That is why I asked Mr. Byford, with a team of advisers, to consider the matter. They have spent five months doing so and they have uncovered much in that time, as is proper. My purpose was to make absolutely certain that the lessons should be properly learnt on this occasion and should be transmitted to all the police services in Britain. Through the inspectors of constabulary I intend to ensure, with the chief constables, that all the lessons will be learned. Less than that would not do justice to an important report and to much hard work from all those concerned.

Mr. Hattersley: I am sorry to press the Home Secretary on my third question, not least because I accept with great appreciation the forthright answers that he gave to the first two questions. However, he will recall that I asked him whether the officers responsible are still in charge of the investigation of serious crime in the area. That is a most important question, and I hope that the Home Secretary will answer me now.

Mr. Whitelaw: I could not guarantee an answer in every case. It would, be wrong for me to do so without checking all the facts. However, I can assure the right hon. Gentlemen that the chief constable and all those concerned are determined to learn the lessons. I shall transmit the right hon. Gentleman's point to the chief constable. It would be wrong for me to respond positively to everything that the right hon. Gentleman said.

Mr. Richard Wainwright: The Liberal Party is also glad that the Home Secretary has brought the Byford report directly to the Floor of the House which, together with West Yorkshire's Sampson report, illuminates the fatal lack of computer power that could have directed towards Sutcliffe months earlier the enormous amount of information that was put on pieces of paper. Yorkshire Television viewers saw those pieces of paper being sifted over in enormous numbers of shoe boxes in the incident room.
Does the Home Secretary agree that the full and continuous use of up-to-date technology will not be provided by ratepayers to the police unless each police

authority can reassure itself continuously that its police force is capable and willing to use technology simply for the detection of serious, specific crimes and not for any other purpose? Does the Home Secretary agree that he could take steps to ensure that there is a consistently better relationship between police authorities and police forces to ensure that information provided by modern technology—which should certainly be made available to police forces—will not be used for the invasion of human rights?

Mr. Whitelaw: I take the hon. Gentleman's point about the importance of the role of police authorities. I have stressed consistently the importance of a close relationship between police authorities and police forces in Britain. Equally, I accept that information that was readily available was not used to the best advantage because of failures in the incident room. I also accept that we are still learning in the police service—as, indeed, throughout the nation—the best use to make of computers and modern technology. We have lessons to learn from this and I must ensure that we learn them.
There is always a conflict of interest, in all problems concerning computer technology, as to what information is given and how it is used. A balance has to be struck in regard to the police service.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to allow 20 minutes for questions on the statement. If hon. Members are brief and to the point, that should be sufficient time to accommodate all hon. Members who have been rising.

Mr. Marcus Fox: During the long investigation, did the police authority give its full support to the chief constable?

Mr. Whitelaw: My hon. Friend is particularly interested in this matter, having a constituency in the area concerned. The police authority, both before the election, when control changed hands, and since, has given the force the fullest possible support, morally and financially. It has put a considerable strain on the force but it has done its best to help in every way it can.

Mr. Joseph Dean: Will the Home Secretary accept that the report and his statement on it throw no new light whatever on the subject? What is contained in the report and the statement has been said by the people and by the media in West Yorkshire for the past 12 months, and the scars left by these events and by the savage murders still linger in the area. Will he accept that the scars are so deep that women are still reluctant to go out in certain areas of West Yorkshire? Will he give an undertaking that the police reorganisation will be examined with a view to providing people with the maximum protection that they are entitled to expect?

Mr. Whitelaw: We all appreciate the problems which have been created for the hon. Members in the area concerned and for their constituents, and I hope that I have discharged our responsibility to them by setting up the inquiry and by asking the inspector of constabulary to supplement the internal review by the West Yorkshire force in order to get at the roots of all the problems. I believe that my statement, and the stark nature of much that I have said, will show that we have gone to the root of the problems. It is now for the police service in West Yorkshire and for the police authority to act on them. That


was fully accepted by the appointed members and the leader of the West Yorkshire county council when I saw them this morning. Everyone concerned must ensure that the lessons are learned fully for the future.

Mr. John G. Blackburn: Will my right hon. Friend, in reflecting on the report of Her Majesty's inspector, always hold fast to the cardinal rule of British law that a man is presumed to be innocent until he is found guilty? That is natural British justice. Many hon. Members found it offensive, after the arrest of Sutcliffe, that there were continual appearances on television by police officers who were responsible for the arrest. If a charge is made, a statement should be given to that effect. Will my right hon. Friend agree that at that point the whole case is sub judice?

Mr. Whitelaw: It is true to say that many statements were made at the time of the arrest of Mr. Sutcliffe which reflected on what was said by the police and what was said and done by the media. Everyone concerned learned from those statements and I do not wish to add to them this afternoon.

Mr. Jack Ashley: Although I welcome the constructive proposals and hope that they will be accepted by the police, what will the Home Secretary do if any police force is not prepared to give the constructive commitment for which he is asking?

Mr. Whitelaw: I believe that the commitment will be given, and it is most important that it should be. Under the Police Act 1964, there is a safeguard. The Home Secretary has a right, through the inspectors of constabulary, to make proposals to various police forces if they do not carry out their duties to the standards expected of them. I believe that my action in asking Mr. Byford, as inspector of constabulary, to inquire into the case, and the way in which the report has been accepted by all concerned in West Yorkshire, shows that our system is right, and we must follow it through.

Mr. Jonathan Aitken: Does my right hon. Friend expect any senior police officers in West Yorkshire to resign or to be moved as a result of the report and, if not, why not?

Mr. Whitelaw: Under the 1964 Act, I could take a drastic step in regard to the chief constable who, of course, is operationally responsible for the whole affair, but that would be only if I were satisfied and could establish that to do so would be in the interests of efficiency. In making that judgment I would have to satisfy myself not simply on the basis of one failure in a force area, however serious and important, but having regard to the general performance of the force as a whole over a period of time and its likely performance in the future. I must make it clear that I am not so satisfied.

Mr. Edward Lyons: Will the Home Secretary agree that the Byford recommendations make it clear that scarcely a police force in the country is adequately trained or equipped to deal with an inquiry on the scale of that required as a result of the activities of my constituent, Mr. Sutcliffe? In those circumstances, is not there some responsibility on people much closer to the top, much higher than the West Yorkshire police force? In addition, in view of the urgent need for training in management techniques, when will it be implemented for senior officers?

Mr. Whitelaw: These are lessons that we have been learning. If I may say so, I and my predecessor as Home Secretary have done a great deal in recent years to bring to the notice of police officers, through the inspectors of constabulary, the need for training in all these fields. Under the right hon. Member for Leeds, South (Mr. Rees) and myself, the Home Office has adopted a very much more positive role in all these matters. It is right to do so and it will continue to do so in the future.

Mr. Gary Waller: Nearly all the murders took place within 10 miles of my constituency. I congratulate my right hon. Friend unreservedly on his statement, and on the fact that he is placing in the Library a summary of Mr. Byford's report. In order to ensure that public confidence in the police persists, it is essential that it should be clear to the whole of the public that there has been no attempt at a cover-up of the sad deficiencies revealed by the inquiry.
Can my right hon. Friend say whether it is true, as the internal report to the police committee by Mr. Sampson suggested, that at the time of the Sutcliffe inquiries no suitable computer system existed? Some of those who have an interest in information technology find that claim difficult to believe.
Will my right hon. Friend ensure, in relation to any future inquiries of a similar nature in any part of the country, that police forces will have access to computer facilities which are suitable to ensure that facts of the son which could have led to the apprehension of Mr. Sutcliffe emerge from the plethora of irrelevant information?

Mr. Whitelaw: I am grateful to my hon. Friend for his remarks about the need to have no cover-up. Afer the publication of the statement—and, indeed, the summary which I have placed in the Library—no such charge could be fairly levelled.
It is true that we have yet to develop successfully the computer facilities that are necessary for use in the police service. Those facilities had not been sufficiently developed at the time in question, and that may be a criticism of all concerned. For the future, we have to ensure not only that computers are available but that they are used to the best advantage.

Mr. Geoffrey Lofthouse: Will the Home Secretary now confirm to the House that he has already taken action in putting a ban on the promotion chances of senior officers of the West Yorkshire police force? If that is the case, does that ban include officers who have not been involved in the Sutcliffe case?

Mr. Whitelaw: I have not exactly put on a ban. I have represented to the West Yorkshire police authority that there are certain officers in the force whom I would not be prepared to agree should go forward for promotion to assistant chief constable. I believe that to be a correct decision. There are other officers in senior positions, who were not necessarily involved in the inquiry, to whom no such bar would apply when the question of promotion prospects arose.

Mr. John Stokes: In view of this serious report and other allied matters, does my right hon. Friend consider that the time has now come for the police force to recruit and train an officer class of


the highest educational standard, in the same way as the Armed Forces do, rather than depend entirely on promotion from within the ranks?

Mr. Whitelaw: I hope that what we are seeking to do, and what we have done, to improve the career prospects in the police service, together with the improvements we have made in the training facilities in the service, not just during my time at the Home Office but before, will improve the standing and efficiency of the police service in this country. That is what we are all seeking to do and I hope that by these means we can achieve it.

Mr. K. J. Woolmer: Does the Home Secretary accept that the comments of those who have followed this matter for a long time now are based not on any inherent criticism of the police but in recognition of the stress and strain placed on them and on the victims and their families? Having said that, is he aware that anything less than the very fullest publication of the report will not satisfy the public of West Yorkshire? Until one has had time to look at it, it is impossible to know whether the summary which has been published meets that requirement.
Secondly, could the right hon. Gentleman comment on whether or not the police authority was properly able to carry out its responsibility on behalf of the public and whether, in the event, the police authority did carry out the kind of questioning and the kind of responsibility that it ought to have done?
Thirdly, is the right hon. Gentleman aware that the public, however unfortunate this may be for the officers involved, will expect the responsibility for any errors properly to be borne and that if the outcome appears to be that, when millions of pounds have been spent and many people tragically murdered, the responsibility of these officers is not seen publicly to have been carried out, people will be seriously concerned?

Mr. Whitelaw: Yes, and of course some of the matters to which the hon. Gentleman referred are inevitably matters which concern both the police authority and myself. That is why I thought it right this morning to ask to speak to the appointed members of the police authority and—I was most grateful to him for coming—the leader of the West Yorkshire County Council.
The hon. Gentleman asks whether those people will have the fullest information about the report. I have made it clear—I made it clear when the inquiry was originally set up and Mr. Byford was asked to produce the report—that because it was a report from an inspector of constabulary to the Home Secretary, it would have to enjoy the normal confidentiality which such reports have always had, and be written on that basis. However, I have said to the police authority this morning that, in addition to the very full and clear summary that has been placed in the Library, I have agreed that the Chief Inspector of Constabulary and Mr. Byford himself will be prepared to answer any questions put orally to them by the police authority, concerning the efficiency of the force. They have seen them this morning and they will be prepared to go and answer any questions concerning the efficiency of the force put by the police authority in West Yorkshire. I do not think the police authority could be given a fairer or fuller opportunity than this to discharge its duties.

Mr. Martin Flannery: Does the Home Secretary agree with me that, no matter what computer facilities existed or did not exist, the number of leads to this man, who was interviewed about nine times, was so massive that there must have been culpable negligence in not following them up and arresting him much earlier? Does he further agree that this man was not caught in West Yorkshire? He was actually caught and brought to the local police station in my constituency, in South Yorkshire, where all the women were as terrified as those in West Yorkshire? Would he finally accept it from me that if some major heads in West Yorkshire do not roll as a result of this, and if that police force is left undisturbed at the top level as a result of this inquiry, there will be grave disquiet throughout the whole of West and South Yorkshire?

Mr. Whitelaw: I do not think I could go along with the phrase "culpable negligence". That would be a mistake. What I can agree is that, with the benefit of hindsight, it is clear, as I said in my statement, that if errors and inefficiencies had not occurred Sutcliffe would have been identified sooner as a prime suspect. There is no doubt about that.
As to where he was arrested, all I can say about that is that he was arrested, as the hon. Gentleman says, in his constituency—

Mr. Flannery: By sheer chance.

Mr. Whitelaw: That is perfectly true, but many of the great criminals in history have been arrested by sheer chance. As for where it was done, I do not mind whether it was in the hon. Gentleman's constituency or anywhere else. The great thing is that the man was arrested and was brought to justice.

Mr. Thomas Torney: In view of the great number of women who were murdered and the long, long time that constituents of mine were terrorised, does the Home Secretary agree that either he or some inspector of constabulary or somebody in high authority should have stepped into West Yorkshire, particularly in view of this report which is now showing inefficiencies in the West Yorkshire force, to ensure that outside assistance—the best brains in the country, in fact—was brought into West Yorkshire to take control of the inquiry long before this actually happened? May I remind the right hon. Gentleman that outside help was brought in only when I raised the matter here?

Mr. Speaker: Order. The length of questions is going to prevent my calling some hon. Members.

Mr. Whitelaw: What the hon. Gentleman says is not quite true, though, as always, there is some substance of truth in what he says. In November 1979, before the hon. Gentleman raised the matter, at the invitation of the chief constable, Commander Nevill and a detective chief superintendent of the Metropolitan Police examined the investigation, and in January 1980 made recommendations to the chief constable. In November 1980, after, it is perfectly true, the hon. Gentleman and others had raised the matter—I do not object to that; after all, if I am not here to respond to what Members of Parliament and others say to me, what on earth am I here for?—I did respond properly to what the hon. Gentleman had said, and I suggested to the inspector of constabulary, Mr. Byford, that we bring in outside people.
In November 1980, through Mr. Byford and Mr. Gregory, we brought in Mr. Emment, the deputy chief constable of the Thames Valley Policy, Mr. Sloan, the national co-ordinator of regional crime squads, Mr. Gerty, assistant chief constable of the West Midlands Police, Mr. Harvey, commander, Metropolitan Police and Assistant (Crime) to Her Majesty's Chief Inspector of Constabulary, and Mr. Kind, director of the Home Office Central Research Establishment, Aldermaston. We brought all those people in, and I think it was right to do so. This House recommended that I do it, and I responded to that.
As for the final arrest, although it was certainly by chance, it was also to some extent as the result of good police work on the beat.

Mr. David Ginsburg: As well as criticism, there is the question of praise, as the Home Secretary has just said. Can he confirm that there is some reference in the Byford report to the role of Sergeant Rigg of Dewsbury whose decisive action led to the proper investigations into the crime being undertaken?

Mr. Whitelaw: No, I am afraid that I shall not refer to individual officers. If I did so, I would get into a difficult area and that is exactly what I should not do. What I can say—it is something I neglected to say to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—is that many officers, detectives and others worked with great dedication for an enormous number of hours and had great strain placed on them and on their families in pursuing this inquiry. I think that they deserve our thanks, despite the fact that there are some criticisms as well.

Dr. Shirley Summerskill: Will the Home Secretary bear in mind the fact that one of the Ripper's victims was a constituent of mine? Will he clarify his reply to my hon. Friend the Member for Batley and Morley (Mr. Woolmer)? Am I correct in understanding the Home Secretary to say that he will not be publishing even a summary of the main conclusions and recommendations in Mr. Byford's report? It is inadequate simply to place the summary in the Library. The constituents in areas where the Ripper's victims lived, and the entire population, should be able to see and study that distressing and worrying report.

Mr. Whitelaw: I am anxious to be as forthcoming as possible. I thought that by placing the report in the Library

I would ensure that it would become widely available. I believe that the report is published, but if it is not I shall look into the matter. I have placed the summary in the Library and I shall ensure that it is available widely.
In addition, I have made it clear that the police authority can ask oral questions of the Chief Inspector of Constabulary and Mr. Byford. If, by placing the summary in the Library and making my statement today, I have not given the fullest information to the public and the press I shall ensure that I do so.

BILLS PRESENTED

NEW TOWNS

Mr. Secretary Heseltine, supported by Mr. Secretary Younger, Mr. Secretary Edwards, Mr. Leon Brittan arid Mr. John Stanley, presented a Bill to increase the limit imposed by section 60 of the New Towns Act 1981 on the amounts which may be borrowed by development corporations and the Commission for the New Towns: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 47].

RAPE

Mr. Robin Maxwell-Hyslop, supported by Mr. Andrew F. Bennett, Mr. Peter Mills, Miss Jo Richardson, Miss Janet Fookes, Mr. Tony Speller, Mr. Jim Craigen and Mr. Malcolm Thornton, presented a Bill to amend the law concerning the offence of rape: And the same was read the First time; and ordered to be read a Second time upon Friday 7 May and to be printed [Bill 48].

STATUTORY INSTRUMENTS, &c.

Mr. Speaker: With the leave of the House I shall put together the questions on the two motions relating to statutory instruments.

Ordered,

That the draft Oil Taxation (Gas Banking Schemes) Regulations 1982 be referred to a Standing Committee on Statutory Instruments, &c.

That the Fishing Vessels (Acquisition and Improvement) (Grants) Scheme 1981 (S.I., 1981, No. 1765) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Pym.]

Noise Induced Hearing Loss

Mr. Ron Leighton: I beg to move, 
That leave be given to bring in a Bill to make further provision for persons suffering from noise induced hearing loss.
I declare an interest. Before coming to the House I worked in a newspaper machine room and was subjected to between 106 and 108 dB of noise and my hearing suffered as a result. Many of my former colleagues still work in such conditions.
Noise induced hearing loss is one of society's most common diseases. The social cost of being deaf is enormous to the individual. It causes tension, fatigue, nervousness, sleeplessness, stress and, perhaps above all, social isolation. It is a strain to communicate at work and at home. Terrible loneliness and isolation can result.
If deafness were an unavoidable handicap for a few, perhaps our indifference and lack of concern would be understandable, if not forgivable, but it is estimated that between 1 million and 2 million people have had their hearing damaged as a result of noise at work. The terrible fact about this type of deafness is that it is preventable. Perhaps because it does not cause physical disfigurement, it is neglected. It can and must be prevented in future. It is a classic case of prevention being better than cure, because such deafness is incurable.
The connection between noise and deafness has been understood for many years. As far back as 1886 a certain Dr. Barr studied boilermakers in Glasgow and discovered that nobody engaged in boilermaking for any length of time escaped injury to hearing. In 100 years our progress has been very slow indeed.
The industry and the factory inspectorate have at various times argued that industry should be encouraged to reduce noise on a voluntary basis. The voluntary approach was epitomised by the 1972 code of practice for reducing the exposure of employed persons to noise.
How successful was that voluntary approach? A study by the factory inspectorate in 1971 showed that 9 per cent. of workers in manufacturing industry were exposed to over 90 dB. Three years later, despite the code, the same companies were exposing 8 per cent. of workers to over 90 dB. The study showed not only that the effect of the code was minimal, but that in 1971 18 per cent. of workers exposed were offered ear protectors and that three years later that figure had risen to 50 per cent. That means that not even the 1 per cent. improvement was the result of reducing noise levels. Industry adopted the short-term, cheap solution. It put people in ear muffs.
My conclusion is that the voluntary approach has failed. The Health and Safety Commission recognised that last year when it issued the first comprehensive set of

regulations for the reduction of noise in Britain. Will the regulations put right the toll of years of neglect in many industries? I regret that it will not.
The TUC has stated that a 90 dB limit is far too high to protect most workers. It asks what is the point of introducing a set of regulations that will not achieve an acceptable level of protection. The TUC does not argue that that can be done immediately, but it is unwilling to accept a standard that is patently unsafe in case we are still arguing about new regulations in another 100 years' time.
The other main criticism of the draft regulations is that they do not place sufficient weight on reducing noise at source. Trade unionists know that employers will opt for the cheap solution. That is what they did in response to the 1972 code. There is no doubt that they will do it again. Techniques exist to reduce noise in industry to below the level that is dangerous to workers. Noisy machines can be insulated acoustically. For example, newspaper presses can be put in sound-proof boxes.
What is the substance of industry's objections? Why has the CBI obstructed progress on the regulations for 10 years? The reason is the cost involved. On one level that is the employers' perennial excuse. Such an argument can be used to oppose every social advance, from the abolition of child labour to the reduction of the working week.
In all my discussions with those involved I have the overwhelming sense that the problem is not just one of cost but of the lack of priority and will in relation to noise reduction. It can involve reorganisation only, rather than expensive noise suppression. Designing noise out at source is relatively cheap, but employers do not demand quiet machinery so manufacturers do not design it.
Unnecessary noise is allowed to creep in everywhere. A print room such as that in which I worked may be noisy, but we turn quiet office environments into "print rooms" with new word processors. The printer does not need to be in the office but somebody, somewhere, decided that deafening office workers was not important—if it was considered at all.
The time has come to make the issue a social and political priority. The Government must give the lead. They must emphasise to the Health and Safety Commission that the new regulations must be tightened in the two crucial respects that I have mentioned. Many other parts of the regulations are uncontroversial and should be welcomed.

Question put and agreed to.

Bill ordered to be brought in by Mr. Ron Leighton, Mr. Michael Welsh, Mr. Don Dixon and Dr. M. S. Miller.

NOISE INDUCED HEARING Loss

Mr. Ron Leighton accordingly presented a Bill to make further provision for persons suffering from noise induced hearing loss: And the same was read the First time; and ordered to be read a Second time upon Friday 19 February and to be printed. [Bill 49].

Orders of the Day — Oil and Gas (Enterprise) Bill

Order for Second Reading read.

The Secretary of State for Energy (Mr. Nigel Lawson): I beg to move, That the Bill be now read a Second time.
The House will recall that, on 10 November, during the debate on the Address, I said that the Government were determined to press ahead this Session with our far-reaching proposals for the British National Oil Corporation and for the British Gas Corporation. The Bill fulfils that commitment. It will enable us to sell shares in the upstream oil-producing business of BNOC and to establish a new financial structure for the corporation which will continue in being after the upstream business has been floated off. It will provide new powers for the disposal of assets held by the gas corporation, subject to parliamentary approval in each case. It will permit for the first time competition in the supply of gas. It will also strengthen various aspects of existing petroleum legislation, in particular in regard to offshore safety. In short, the Bill will be a landmark in the history of national policy towards Britain's energy resources in the North Sea.
Part I deals with the sale of shares in BNOC's oil-producing business, with the establishment of a new financial structure for the corporation and with the abolition of the national oil account. There are three main reasons why we believe that the oil exploration and production interests of BNOC should be part of the private enterprise sector of the economy.
First, the proper business of Government is not the government of business. No industrial corporation should be owned and controlled by the State unless there is a positive and specific reason for such an arrangement. That is manifestly not so here. The successful development of our North Sea resources has been overwhelmingly the achievement of private enterprise. No Opposition Member can gainsay that. Our vital strategic and other national interests are fully safeguarded by the complex statutory framework of regulatory controls, participation agreements and taxation, all of which remain, and will remain, fully in force. Duplication by the State of the activities of the oil companies in the production of oil adds nothing to our security of supply or to any other national interest. It is our control over the British section of the North Sea and the powers that this gives us over all who operate there that matter, and not the ownership of one oil company which is responsible for 7 per cent. of United Kingdom North Sea output.
Secondly, privatisation will be in the best interests of BNOC itself. It has now been in existence for six years and has an oil-producing business with considerable expertise and potential. After a period of consolidation, it is rightly looking to expand. This calls for the freedom to seize opportunities as and when they arise, for investment and for the spirit of enterprise. While the business remains in the State sector, its activities will inevitably be subject to the politicisation and to the constraints that that entails. Its financial requirements, which will not for ever remain within the size of its own internally generated resources, 

must compete with other claims on the public purse and the spirit of enterprise will in time be stunted. Privatisation will be an act of liberation.
Thirdly, we believe that the British people should have a much better opportunity to share directly in the country's oil wealth. Symbolic ownership of BNOC as a State corporation is in no sense a satisfactory substitute. We wish to see public ownership in the true sense of the term, and I hope to see ownership of the shares in the new company spread as widely as possible. I also hope that the management will take advantage of the special provisions for employees' share schemes in the Bill.
BNOC as at present constituted conducts essentially two forms of business. The first is the production of oil. The second is trading in oil, based on the network of participation agreements. It is our intention to transfer the entire oil-producing business to a subsidiary formed under the Companies Act for that purpose. The transfer will be carried out by the method set out in clause 2 and schedule 1. This will leave the corporation with the trading business, and with the participation agreements, which will remain intact, with the small but expert staff, the rights and the assets needed to give effect to them.
The name of the new subsidiary will be Britoil. I have asked the corporation that it be registered in Scotland. The formation and the registration of Britoil could occur soon after Second Reading, although it could not become fully operational until the Bill is on the statute book. I notice that Opposition Members opposite are not interested in whether there is a Scottish dimension to this, but many hon. Members are.

Dr. J. Dickson Mabon: May I congratulate the right hon. Gentleman on the statement he has just made that Britoil will be a Scottish registered company? That is a tremendous step forward, but shall we be told a little more about the articles of association, the distribution and dispersal of ownership and particularly foreign ownership?

Mr. Lawson: The right hon. Gentleman has great charm, but he is always a little impetuous. If he can restrain himself and be patient, I shall come to that matter in due course.
Once reorganisation of the corporation's assets is complete, the Bill will enable the Government to take: possession of the corporation's shares in Britoil. This will be done.
Our initial aim is to sell 51 per cent. of the shares in Britoil. The Bill will keep open the way for a further sale from the Government's shareholding at some later date, when the Government of the day decided that it was in the national interest to do so. We shall make the position abundantly clear in the prospectus.
While the precise timing naturally remains subject to market conditions, my hope is that the sale of shares will take place before the end of this year. Immediately after Second Reading, I shall be asking the corporation, in close consultation with my Department, to take what steps it can to prepare the way for flotation. We would not, of course, go ahead with an offer for sale unless we were satisfied that the selling price represented fair value for the taxpayer, but I see no reason whatever to doubt that an acceptable price can be obtained. Certainly, the market will know how much weight to attach to the bluster of the official Opposition.
After the sale of 51 per cent. of its shares, Britoil will operate as a normal private sector company. The management and work force will be responsible under their directors for their own future.

Mr. Tam Dalyell:: The right hon. Gentleman has referred to value for the taxpayer. Who is to judge that and how is it to be judged?

Mr. Lawson: That is one of the many responsibilities of Government. The Government do not intend to control—

Mr. Douglas Jay: Before the right hon. Gentleman leaves the subject of the sale of the shares, will he say whether the purchasers, whether employees of the company or not, will be free to sell them on the Stock Exchange to anyone they wish?

Mr. Lawson: Of course they will be free to sell them to anyone they wish, but the point at which the right hon. Gentleman is driving is rather similar to the point raised by the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), a much disputed constituency these days, I understand. As I said, I shall be coming to that in due course.
The Government do not intend to control the company or to use their rights as a shareholder to intervene in the company's commercial decisions. The Government will retain special rights in the articles to prevent any unacceptable change in the future control of the company; I think this is the point the right hon. Member for Battersea, North (Mr. Jay) was raising. Except in these circumstances, the Government do not expect to vote their shareholding in opposition to resolutions supported by a majority of the board, although they retain the right to do so.
I have undertaken, as I said in answer to an intervention by the right hon. Member for Leeds, South (Mr. Rees) in the earlier debate on 10 November, to make available to the House the articles dealing with changes in control of the company in which a certain amount of interest has already been expressed elsewhere. Of course, I shall do so.

Mr. Dalyell: When?

Mr. Lawson: During the passage of the Bill. There will be ample opportunity—

Mr. Dalyell: The right hon. Gentleman said "during the passage of the Bill". He may recall what happened during the passage of the Wildlife and Countryside Act. It is unsatisfactory for any Government to come up with vital matters three-quarters of the way through the passage of a Bill. It makes a great difference to how we approach the Bill before us whether the information is published at an early stage. We should not start the Committee stage until we have the information.

Mr. Lawson: I do not accept that for a moment, but if what the hon. Gentleman said earlier is correct, I shall try to do better in the provisions dealing with the flora and fauna of the oil industry.
It may be helpful if I say what we envisage will be in the articles. We envisage that in any situation in which there is an attempt to take over the company the shares held in my name as Secretary of State should carry a temporary majority of votes, whatever the nationalities of the parties involved. Similarly, in any situation in which there are attempts directly or indirectly to obtain control

over the composition of the board the shares held in my name should carry a temporary majority of votes on any resolution to appoint, re-elect or remove any director. Those are very important powers. I believe that the articles will provide effective safeguards against unacceptable changes in control of Britoil.
We also intend that there should be two Government directors on the board of Britoil for as long as the size of the Government's shareholding warrants it.
BNOC itself will remain in existence as a State trading body dealing primarily in participation oil.
The Bill will also end the corporation's special access to interest-free money from the national oil account, an arrangement that has been much criticised by the Public Accounts Committee.
We shall naturally want Britoil, like any other oil company, to enter into a participation agreement with BNOC covering its existing licence interests, and the terms of this agreement will be settled well before the sale of shares. Hon. Members will want to know, in particular, how this will be applied to the fifth and sixth licensing rounds where there is no participation but where BNOC owns 51 per cent of the equity.
In general, I shall seek public sector access to about half the production from each licence, but without disturbing the present rights of private licensees. I shall not seek access to more than 51 per cent. of Britoil's oil from licences awarded in the first four rounds. But in the fifth and sixth rounds, depending on the detailed provisions applying to each separate licence—and they vary—this policy may require BNOC to have options to more than 51 per cent. of Britoil's oil. This is in no way unfair to Britoil, because in those licences BNOC's 51 per cent. equity share, which Britoil will inherit, was a substitute for participation. Nor, of course, will it in any way impair Britoil's profitability, since BNOC will have to purchase participation oil at the full market price.
I now turn to part II, which deals with the disposal of gas corporation assets and the breaking of its monopoly in the supply of gas. As the House knows, it is our intention to use the new disposal powers, in the first instance, to privatise the corporation's substantial investment in North Sea oil.
The existing Gas Act, accepted by Governments of both parties, contains a power of disposal—indeed, it is under the existing legislation that the corporation was required last year to dispose of its interest in the Wytch Farm oilfield. What the Bill does is to widen that power, while retaining, contrary to the claims of the hon. Member for Merthyr Tydfil (Mr. Rowlands) in The Observer last Sunday, the requirement for parliamentary approval in each and every case.
In any case, it really is the height of impertinence for the Opposition to complain of the scope of the powers that we are seeking, because, of course, they, when in office, wanted to go a good deal further. In their 1978 White Paper on the nationalised industries they stated their intention to take the power to give directions, general or specific, to any nationalised industry on virtually any matter that
appeared
to the Secretary of State
to affect the national interest.
Had the electorate not wisely removed them from office the following year, this power would already have been on the statute book.
But I have little doubt that, in the long run, the more important provisions of part II concern the breaking of the British Gas Corporation monopoly. By law the gas corporation enjoys unfettered ownership of the onshore pipeline grid, exempt from the regulatory provisions of the Pipe-lines Act 1962, which apply to private sector pipelines. And, above all, it possesses an effective monopoly of both the purchase and the supply of gas in the United Kingdom.
As a result, producers of gas inevitably see little incentive to explore for and develop gas reserves, because they know that, at best, they will be faced with a take-it-or-leave-it price offer from the corporation, and that at worst they may get no offer. It is hardly surprising that, in sharp contrast to the position with offshore oil, exploration for gas is minimal, and we do not even have a clear picture of what our total gas reserves amount to. Meanwhile, many industrialists throughout the country are deprived of the gas that they would like to buy.
We have therefore decided to break the monopoly and open the industry up to the spur of competition. British Gas will still retain its statutory monopoly, but only within that market which it has a statutory obligation to supply on demand all consumers— they of course include the vast bulk of ordinary households—whose premises take less than 25,000 therms a year and are no more than 25 yds from a gas main. But in all other cases the corporation's monopoly will cease to exist. Other suppliers will have a chance to compete, for the first time.
In the case of those consumers whose premises take less than I million therms a year, the supply of gas will still be by the Secretary of State's consent, but I would envisage granting such consent in all cases where I was satisfied that the safety arrangements proposed were adequate.
In the case of those consumers whose premises take over 1 million therms a year, freedom to compete for their custom will he absolute. This category represents roughly three quarters of all industrial and commercial gas sales.
However, the breaking of the statutory monopoly along the lines that I have just indicated will not of itself be enough to make competition a reality. The Bill therefore also makes provision for effective private access to the gas corporation's pipeline network.
In the first instance it will be up to other suppliers to negotiate with the corporation the terms on which it is prepared to transmit their gas through its grid, but, as is customary with common carrier arrangements, there will be a right of appeal—in this case to my Department, at least in the early years—against any refusal by the corporation to carry private gas on the grounds of, say, inadequate capacity, or against the terms quoted by the corporation for the carriage of gas.

Mr. Dick Douglas: Does the right hon. Gentleman intend to prohibit the use of the gas grid for purposes other than the supply of United Kingdom industrialists and so on? In other words, will he prohibit the use of the gas grid for the export of gas?

Mr. Lawson: The requirement that gas should be landed in the United Kingdom remains. It is unaffected by the Bill.

Mr. Dalyell: The Secretary of State talks about the right of appeal to his Department. What technical facilities

are there in the Department of Energy to pass judgment on these very complex, detailed issues? There may be such facilities, but I do not know of them.

Mr. Lawson: There is considerable technical expertise in the Department. The particular technical expertise needed to fulfil that role and to process the appeals—I hope that in most cases agreement will be reached between the gas supplier and the gas corporation without the need to go to appeal, but there will be some that have to go to appeal, and there must be recourse to appeal—will require a small number of additional civil servants expert in this matter. However, the hon. Gentleman will be glad to know that I am confident that I can accommodate them within the declining numbers of civil servants to which ray Department, in common with all other Government Departments, is committed.

Mr. T. H. H. Skeet: My right hon. Friend has made a very important statement. He has said that in the earlier years the Department of Energy will look after the arrangements. Is he undertaking that at some future date an independent commission will be established to see that appeals go through with great justice to all sides?

Mr. Lawson: My hon. Friend is on to a very good point. It is sensible to review the position after a few years of running the new system and it may be necessary and sensible to institute the sort of agency to which he has referred. But we do not need that in year one.

Mr. Gordon Wilson: rose—

Mr. Lawson: I am not giving way at this stage.
It has been alleged that the effect of introducing competition into the gas market will be to increase prices. That is stuff and nonsense. Competition here, as elsewhere, will tend to reduce prices below what they would otherwise have been, both by stimulating efficiency and by encouraging the provision of new and increased sources of supply. The proposals have been widely welcomed throughout British industry for that reason.
The new impetus for the exploration and discovery of gas in the North Sea will be one of the first benefits to flow from this part of the Bill.

Mr. Peter Hardy: Does the right hon. Gentleman accept that what he has just said could cause considerable misgivings in the gas industry? Will he make it clear that he will not seek to create lower prices by forcing British Gas to act as a common carrier and provide, in effect, a subsidy for those who wish to use its pipelines?

Mr. Lawson: I do not suggest anything other than that British Gas should run a common carrier service on a fully commercial basis.

Mr. Gordon Wilson: rose—

Mr. Lawson: I shall give way, as I am a man of charitable disposition.

Mr. Gordon Wilson: Giving way gives the right hon. Gentleman an opportunity to show that he is not guilty of racial discrimination. In his answer to the hon. Member for Dunfermline (Mr. Douglas) about pipelines he said that there would still be an obligation to land gas in the United Kingdom. He did not say specifically that there might be some other extension of the pipeline to the Continent, after the gas has been landed in the United Kingdom. Will he kindly say that the Government have no intention of allowing the export of natural gas to the Continent?

Mr. Lawson: The re-export of gas from the United Kingdom is permitted under existing arrangements. The requirement is merely that the gas should be landed in the United Kingdom, and that position is unaffected by the Bill. I am talking about the position under legislation introduced by the Labour Government.
Nor do I accept for one moment the claim that this means that our gas resources will be depleted at an excessive rate. The Government will retain the power to impose a depletion policy should that seem warranted, but, in general, market forces will provide a far more reliable guide to the optimum rate of depletion than central planning by a statutory monopoly.
In short, I am confident that the gas provisions of the Bill will revitalise the industry and foster the growth of private enterprise to the benefit of producers and consumers alike, and I commend them to the House accordingly.

Sir Albert Costain: Will my right hon. Friend make clear the position of a company building its own pipeline? I can visualise cases where companies will want to take gas from a gas field to a factory. Will the Bill give an enabling power to do that?

Mr. Lawson: My hon. Friend is absolutely right. There will be nothing to stop a gas producer building his own pipeline straight to a large factory which happens to be by the shore and can take gas economically in that way, although I should think that in most cases the common carrier system is likely to be used. Nevertheless, there will be cases when producers will wish to build their own pipelines, and they will be perfectly free to do so.
I have concentrated on the provisions in parts I and II because I know that they will be of particular concern to the House, but I also commend to the House the remaining parts of the Bill, which are of importance, particularly as regards safety, and which all contribute to the proper and consistent regulation of activities on the United Kingdom continental shelf.
The last occasion on which the House debated the proposals now embodied in the Bill was notable for a remarkable speech by the right hon. Member for Bristol, South-East (Mr. Benn) from the Opposition Front Bench. I informed him that I would refer to it. [HON. MEMBERS: "Where is he?"] I do not know where the right hon. Gentleman is, but he conveyed his apologies to me for his inability to be present. However, I have a shrewd suspicion why he is not in the Chamber. The right hon. Gentleman's speech, on 10 November, was his first speech from the Opposition Front Bench in this Parliament. As it turns out, it looks likely to have been his last one too. Presumably, as one of the terms and conditions of the treaty of Bishop's Stortford, he has felt obliged to stay away from the House for this debate.
I take it that that means that we shall not be told today that official Labour Party policy is renationalisation without compensation, or, in plain English, theft, or that it embraces a commitment to nationalise the whole of the North Sea oil industry, lock, stock and barrel. But I hope that the right hon. Member for Leeds, South (Mr. Rees)—I know how pained he was at a certain point on that earlier occasion—will take this opportunity to disown, without equivocation, the irresponsible statements made by his right hon. Friend. If he does not do so, the House will know what to conclude. While he is about it, the right hon.

Gentleman might also care to place a copy of the treaty of Bishop's Stortford in the Library. I am sure that many of his hon. Friends will be interested to discover its precise terms and conditions, if only because they wish to decide which of them to break first.
The policy of the right hon. Member for Bristol, South-East is at least coherent, which is more than can be said for what I understand to be the policy of the right hon. Member for Leeds, South. Nationalisation of the entire North Sea oil industry would be a national disaster, but at least the thinking behind it is reasonably clear. By contrast, what possible advantage or case can there be for State ownership of one company among many—and that, by no means the largest?
In his article in last Sunday's edition of The Observer —I was grateful for the opportunity to gain a little insight into the Opposition's thinking, if that is the right word—the hon. Member for Merthyr Tydfil advanced only two reasons for such ownership. The first was that without it, the Government would no longer know what was going on in the North Sea oil industry. That is sheer poppycock. As a direct result of the powers that the Government have in this field, the Government of the day acquire and will continue to acquire more information about the North Sea oil industry than about any other industry in the country. Like infantile Leftism, the Opposition's paranoid fear of the multinationals is a form of disease. It requires not so much rebuttal, as treatment.
The other argument advanced by the hon. Member for Merthyr Tydfil in his article in The Observer in favour of continued State ownership of BNOC in its present form, was that the first chairman of BNOC, Lord Kearton, was originally opposed to privatisation [Interruption.] I hope that the hon. Member for Merthyr Tydfil will have the courtesy to listen, rather than to chatter from a sedentary position, because I am referring to an article that he wrote, or had written for him.
Since, however, Lord Kearton has now come out publicly in support both of the ending of the gas monopoly and the privatisation of the upstream business of BNOC, that argument, too, is looking a trifle frayed. The truth is that the Opposition are still locked in the dogmas of the past. Their reflexes are still conditioned by the echoes of Clause Four. How else could they have failed to learn from the lessons of experience?

Mr. Dalyell: rose—

Mr. Lawson: The unsatisfactory experience—

Mr. Dalyell: rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The Secretary of State is not giving way.

Mr. Lawson: The unsatisfactory experience of 30 years of State ownership of a substantial section of our national economy is incontrovertible. Strenuous efforts by successive Governments over the decades have led to inumerable papers, reports and debates, but very little progress on the problems of running these industries. Indeed, if anything, the problems have grown in size and intractability.

Mr. Dalyell: rose—

Mr. Lawson: I hope that the hon. Gentleman will listen to me and not interrupt because I am making a serious point. If the problems are less acute now with BNOC than with the gas corporation, that is partly because


BNOC is one of the newest of the public corporations, and its spirit of enterprise has not yet been stifled by the bureaucratic embrace or perverted by immunity from bankruptcy. However, it is the widely acknowledged problems of the nationalised industries that the Government have, in a commonsense and undogmatic way, sought to tackle as well as the requirements of energy policy. It is in that spirit that we have sought sensible candidates for release from State ownership and the problems attendant on it, and ways of introducing competition and efficiency to the State-owned monopolies. The Bill seeks to achieve those results in one vitally important section of our economic life. It will benefit the oil and gas industries, their customers and the nation. I commend it to the House.

Mr. Merlyn Rees: The latter part of the speech of the Secretary of State for Energy was terribly amusing and the earlier part remarkably thin. It was not the speech of a Secretary of State giving information to the House of Commons.
If the parliamentary importance of a Bill is reflected in the amount of time given to it on the Floor of the House, we must consider that we have already had a debate in which a statement of clarity was made by the Secretary of State after he had briefed the press. Although parts of this debate give me no great hope of it, we should have a long Committee stage. In Committee we shall deal with the gas and oil aspects. On the most important aspect—safety—the Secretary of State has said not a word.
This is an important Bill and it will have a long Committee stage. The first question I shall raise is about parliamentary accountability in the sense of information. Can the Secretary of State provide the Committee with a deal of relevant information on all sections of the Bill? There is appropriate information such as policy documents and it would be much better if we had access to them in Committee.
On a Bill of this nature, Opposition parties find it extremely difficult to get the factual information that they require. I ask the Secretary of State to provide us with all the information that is available. It will be well received.
The same applies to the two corporations affected by the Bill—the gas corporation and BNOC. At one stage, BNOC was an adviser to the Government on the basis that, under all Governments, oil accumen could not come from any Department let alone from a Minister. The gas corporation has much technical information and experience and, since it has factual information, I wonder whether the Secretary of State could arrange for that information, from both corporations, in the same way to be provided to us in Committee. For example, as I understand it, the gas corporation disagreed with part VII of the explanatory and financial memorandum on the number of extra staff which will be required in the Department of Energy. The Secretary of State and the gas corporation may be right, but would it not be useful if we had the relevant information on which we could make up our minds? There is disagreement on that and I simply ask for the paperwork to enable us to make a judgment.
As I understand it, there is disagreement about the highly technical matters arising from the new arrangements for the carriage of private gas which, again as I understand it, has been done in a different way from that

in the United States and other countries. A survey has been carried out in different countries, comparing methods of carriage of private gas, which has enabled other gas corporations to make assessments. Would it not be a good idea if that document were made available to us?
The points that I have raised are highly important and not political matters. In Committee, it would be much more sensible and practical if a deal of that information could be provided.
On the same aspect of information but in a different context, I shall deal with part IV of the Bill first. We have had two bites of the cherry on gas and oil. Part IV is really a separate Bill which has been included in the measure before us. Governments have done this before. May we have some information on that?
The Bill refers to the protection of installations, to safety and to new applications of criminal and civil law. Where can we be briefed on such highly complicated matters? To get it right it needs different treatments and I suggest to the Secretary of State—not in desire to waste time, as could easily be done if necessary—that we take part IV out of the Bill as it deals with other matters. Could we not have a Select Committee procedure whereby the gas, oil and shipowners in the North Sea could be asked questions so that we could get it right and so that the procedures on the safety section of the Bill would be very much shorter? It is important that we get it right.
As Home Secretary, I remember being involved in the security side. With no reflection on the Department of Energy, that is not its field. Security involves a responsibility on the police and security services which relate to the Home Secretary. There is a responsibility on the Navy, in particular, and, to some degree, on the Army. There is also a responsibility on the Department of Employment to issue work permits, for example. The Secretary of State did not refer to any of that this afternoon and I simply ask that we have a procedure of that kind. I do not do that to waste time. At the very least, if that is not possible, we shall require Home Office Ministers—not junior Ministers—to deal with security matters. If pan IV of the Bill is to get it right, we shall require senior Ministers from other Departments to be in Committee.
My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) and three of my colleagues are associated with a group which contains transport and general workers, seamen, British airline pilots, electricians, engineers, ASTMS and Merchant Navy officers. That group has produced a charter. I shall not go through it all because of the shortage of time, but I shall raise some points which will arise under part IV of the Bill.
The group's charter requests that the responsibility for the health and safety of offshore workers should go to the Health and Safety Commission. We shall discuss that aspect. The number of safety inspectors with access to all offshore installations is also questioned. British manning and safety standards and their application to all operations in the United Kingdom sector are also questioned, as are submersibles, helicopters and work permits; I recall the latter from my days at the Home Office. They will all require different treatment from that given to oil and gas, on which many hon. Members on both sides of the House have gathered their own experience over the years.
I confess that the offshore aspect was new to me but for the Home Office matters. When I put my mind to it this week, I discovered that since December 1981 there had


been 111 offshore deaths and 426 serious accidents. This subject is not to be played with for the sake of the Committee stage of the Bill.
I have been told that a book has been written by Mr. Carson of Edinburgh university in which he concludes that those deaths are avoidable; that the accidents do not arise because the operators are at the frontiers of technology. The deaths and accidents arise because the safety arrangements are inadequate. The Secretary of State omitted to mention matters which may reflect his own interests or a matter of time, but when we come to part IV, we ask him to find a different arrangement. If we get it wrong in Committee, the numbers of deaths and accidents will increase because, perhaps, of a failure on our part. I suppose that deaths occur, as at sea and in the mines, because of the nature of the job. Clearly it is a dangerous job. We must put our minds to ensuring that the law is as well put together as possible and that we get all the necessary information.

Mr. Lawson: I shall do my best to respond to the right hon. Gentleman. First, it is not true that I did not mention part IV. I said that it was important, especially the safety provisions. It is in the Bill because we consider it to be important. Some of the provisions are a specific response to the "Alexander L. Keilland" disaster. Other provisions clarify existing legislation. We shall provide such information as we can to help the right hon. Gentleman in his task. Notes on clauses are available in the Vote Office for the convenience of hon. Members. I cannot understand why the right hon. Gentleman does not believe that the proceedings in Committee, if they are taken in a sensible fashion, will provide an adequate opportunity to debate all the matters that concern him.

Mr. Rees: Part IV is a disparate part of the Bill. It raises issues that come within the responsibility of other Departments. There are aspects of safety in the North Sea on which I cannot be briefed. I have no access to the necessary information except, in certain respects, through the results of the work of my hon. Friend the Member for West Lothian (Mr. Dalyell). That is why I am asking that information should be provided on part IV.
We wish to be able to put questions to trade union officials and to those who operate in the North Sea, including the "managers", if that is the right word, on the rigs. I have been on one or two rigs and the "boss men" have impressed me. We should be able to ask them, "What do you think is wrong with the procedures?" I hope that the right hon. Gentleman will consider that approach.
The Government's approach shows their worship of free market forces. They worship them in a way that would offend Adam Smith, just as those on the far Left of politics worship Karl Marx in a way that would offend him. The support given to free market forces and monetarism is the hallmark of the Government's policy. They support those concepts to the isolation of anything else. Of course market forces matter. Of course monetarism and the money supply matter, but they cannot be regarded in isolation. There is a Central European ideological tang about the Government's approach to economic policy. The Government seem to regard economic policy in a way that old Toryism had the good sense never to do. That laps over into the Bill.
We are dealing with two industries of different structures that in different ways have been highly successful. BNOC is not a statutory monopoly. It has been highly successful in production and trading and it is highly regarded in the industry. The proposed break-up of the corporation runs counter to the current trend that is followed by Governments of all political persuasions who have established State oil companies—Petrobras in Brazil, Petrocan in Canada, Deminex in West Germany and Hispanoil in Spain. OPEC is currently trying to reduce the influence of multinational oil companies in the oil market and to encourage State-to-State deals only through State oil companies. That may not be to the liking of the Secretary of State but that is a fact of life. State oil companies are being used to secure supplies by participating in overseas joint ventures—for example, Deminex and Svenska Petroleum. BNOC has been examining oil provinces in Malaysia and Venezuela with a view to securing supplies from the late 1980s onwards. Within the United Kingdom continental shelf a State oil company is necessary if the Government wish to have the capability to develop marginal fields for reasons of national interest.
One of the issues that we shall have to pursue in Committee is whether the Government believe that the oil companies will go to the marginal fields off the west of Scotland. These are fields to which BNOC would go, and Canada's experience is that it is the State companies that go to the marginal fields because the return of profit in the early days is not such as to attract ordinary companies. The Government have not learnt the lesson of 1973. The experience with Shell and BP in 1973 showed that multinationals are a poor alternative as guarantors of petroleum supplies.
The gas corporation has 15 million customers. It has about 500,000 industrial customers. It has changed from an old-fashioned, coal-gas, locally based industry to a modern, integrated national company. It is in the lead in research and in concern for the future as it is in concern for the present. It provides revenue for the Treasury and extra revenue by a levy. The Government have increased the price of gas as a deliberate act of policy.
Parliamentary accountability in its main sense is the control of the Executive by the House. The extent of the powers that are given to the Secretary of State in clauses 1 to 8 and 9 to 11 as well are very great. What control will the House have over the decisions that the right hon. Gentleman takes in the first instance, let alone those that are taken later? At the end of the day an order under the negative procedure will be brought forward to reveal all the great changes that will take place. Those changes should be set out in the Bill.
There is much talk about those on the left in politics and about the moderates, whatever those terms mean. It is said that we want to end parliamentary democracy. This Bill could appear before the East German Parliament—

Mr. Edward Rowlands: It is not a bad start.

Mr. Rees: I have to argue with those on the far Left when I visit universities. They say, "We need a one-clause Bill. That is all we need. There will be no need for discussion afterwards". The mentor for the boys on the Left is the Secretary of State for Energy. They will be able


to call him in aid. From now on I shall call him the East German Minister. I shall do so because of the powers that he seeks to take in the Bill.
There is a curious circularity in politics. The extreme Right and the extreme Left go round in circles until eventually they meet. The right hon. Gentleman loves to use the word "bluster" but I wish to tell him that I am offended by the Bill. We shall not know anything about the main parts of the Bill until we see the negative instrument, which will be unamendable. It will be brought forward and we shall not be able to discuss half the issues that feature in today's debate. We shall not know what the Government intend to do until the negative instrument appears before us. Will powers be taken to sell the oil interests or will they be used to break up the gas corporation? The Secretary of State will be able to do what he likes. He will not need a Bill in future to break up the corporation. The Bill will provide the powers that he needs.
There is talk about the sale of the oil assets of the gas corporation. We have heard about the articles of association, which we shall consider at an early stage in Committee. We shall direct our minds to the privatised Britoil. What steps does the right hon. Gentleman intend to take to ensure that the oil interests of British Gas in the North Sea are not snapped up by foreign interests? I was told some months ago that French oil companies are interested in going to Wytch Farm because the oil that is being tapped there is from the Channel quadrant. Apparently a considerable amount of oil will come from that part of the Channel. The question that I should like to be clear on is whether we shall have articles of association or the equivalent with the sale of British Gas Corporation oil.

Mr. Skeet: The right hon. Gentleman mentioned the enormous powers given to the Secretary of State under the Bill. Is he aware that the Petroleum and Submarine Pipe-Lines Act 1975 gives vaster powers and that the Petroleum Production Regulations 1976, which give vaster powers than that were granted by his Government under the signature of the right hon. Member for Greenock and Port Glasgow (Dr. Mabon).

Mr. Rees: The point that I am making is that the powers are there but that in order to come back to the House of Commons, the Bill provides a negative order. We have heard about Britoil and the trading company today. That is not in the Bill. We shall not be able to make amendments on those matters. We shall have to find ways of making safeguards, although I cannot see how that can be done when the subject is not mentioned in the Bill but was mentioned on the Floor of the House on Second Reading and in the briefings to the press. We shall not be able to debate those major proposals properly in Committee.
The Secretary of State said that BNOC would be split two ways. Should we not see the communication that I understand was sent to the Secretary of State by the whole board of directors of BNOC? It said that the solution put forward by the Government would maximise the EEC threat to participation, assure the inefficiency of the trading operation, which would have less access to technical operating expertise, make difficult the retention of qualified staff and expose the trading company to heavy trading losses. That is a damning indictment of what the

Government have put forward. We should know about that assessment and not just deal with it on the surface. The board of directors may be wrong but the House should know what it said. The members of that board were appointed by the Conservative Party.

Mr. Tim Eggar: I do not know whether the right hon. Gentleman has read the same press articles that I have read. I understand that some directors of BNOC were against the trading arm of BNOC being kept under Government control. Would the right hon. Gentleman go along with that? Would he support those directors of BNOC?

Mr. Rees: I am talking about a decision taken by the whole board. However, if that is what happened, let us have the evidence. I completely agree with the hon. Gentleman. I am not selecting the evidence that I like. Let us have it in Committee.
I now turn to hybridity. This week I have consulted all the proper authorities. Perhaps there is no prima facie case of hybridity in the Bill. I am told that the reason is that the Bill says nothing. It would be difficult for it to be hybrid, because it does not say anything on the matters that arise. It simply says that we should hand over the powers to everybody else. My right hon. and learned Friend the Member for Warley, West (Mr. Archer), who was the former Solicitor-General, discussed the matter in the appropriate places. He and I found that there was a negative order, but under negative orders there are no safeguards to prevent the Minister's differentiating between the rights of a certain class of people. We found that the scheme is mini legislation at the discretion of the Minister. We cannot use the hybrid instruments committee of the House of Lords because it is a negative instrument. If it were an affirmative instrument, we should have the right automatically to discuss hybridity on the Floor of the House. That is wrong. It should be an affirmative order. If it is hybrid, let it be so considered.
It is wrong in principle that in gas the Secretary of State should have powers to prepare and dispose of schemes that will have a legal effect and in so doing modify and rewrite private contracts. If he wants to do it that way, there should be the parliamentary procedures to consider the matter. The Bill should not be drawn up to avoid a consideration of hybridity. That is a shabby sleight of parliamentary hand. We shall attempt to ensure that the affirmative procedures are put into the Bill.
How on earth shall we discuss the articles of association so that we can amend them? Will the articles be written in such a way that they are amendable by us? Shall we have to wait until the end of the day when the flaring order, which is unamendable, comes forward for an hour and a half—if it can proceed to the Floor of the House? When it reaches the House of Lords, the hybridity Committee will not be able to consider it, because of the way in which it is drawn.

Mr. Lawson: I believe that the right hon. Gentleman's sense of outrage has got the better of him. Under the negative resolution procedure in the Gas Act 1972, the Wytch Farm order was made. Nevertheless, my right hon. Friends who were responsible for organising the Government's business ensured that there was an opportunity to debate that order. It was debated and voted upon. If the right hon. Gentleman is afraid that there will not be opportunities for debate on such orders, I am sure


that in much the same way, according to the traditions of the House, there will be a full opportunity to debate and vote on the orders when they are made.
The right hon. Gentleman also referred to the split of BNOC into Britoil and what remains of the corporation. He attributed great powers of invention to me in devising a method of dealing with those matters. In all modesty, I must disavow that. That procedure has been used on a number of occasions. The first was in the Transport Act 1968. The inventor of that procedure, to whom I pay tribute, was Mrs. Barbara Castle.

Mr. Rees: Perhaps that was so on the Transport Act, but whether Mrs. Barbara Castle or anyone else set up the procedure, it is wrong. I see no point in calling in aid the gods or goddesses of the past. I conducted an investigation into the legislation of recent years. There is no doubt that the procedure used by the Government at the moment is not the one with negative instruments, in the context of the powers that are taken, which is normally used.
I have asked about the articles of association and about foreign control of oil. Because of other happenings, I noticed this week that in the Independent Broadcasting Authority Act, which was put through by the Conservative Party, the powers to prevent a foreigner from taking over a television company were written into the legislation. If that can be done on the Independent Broadcasting Authority Act, it should be written into the Bill and not into the articles of association.
I accept what the right hon. Gentleman says—that the Government will have the same depletion policy as before.

Mr. Lawson: I did not say that.

Mr. Rees: Therefore, I shall ask the question that I intended to ask before I misunderstood the right hon. Gentleman. Is depletion policy the same as it was? If the clear intention of the Government is a major and rapid increase in the industrial consumption of gas, surely that makes a nonsense of any proper depletion policy that we follow.

Mr. Douglas: Will my right hon. Friend concede that one cannot have a depletion policy in the context of the Bill as the House does not have full information about the Government's intentions on tax?

Mr. Rees: That is another aspect. The Committee may still be sitting when the tax changes which are apparently coming from the Chancellor of the Exchequer are announced, so we shall be able to look at both.
I wish to ask a question about the EEC and the BNOC but I shall keep that until I ask exactly the same question about the British Gas Corporation.
In my view, the British Gas Corporation has been highly successful. I have made it clear that it is the Opposition's view, it is my view, that the effect of the ending of the monopsony will be to increase prices. It must so be. I am amazed at the right hon. Gentleman's belief in free market forces.
If there are free market forces in conditions of perfect competition, there is much justice in what he says, but perfect competition is in the textbooks, not in the real world of multinationals and so on. Those conditions do not prevail in practice or in the Government's overall policy now.
I do not know what will happen in the coal industry. The policy of "switch to coal" will take a hard knock from a policy of expanding the use of gas for non-premium uses, which I assume is involved in what the right hon. Gentleman says.

Mr. Peter Rost: If the right hon. Gentleman is so convinced that the Bill will put up the price of gas, should he not tell the House what price per therm British Gas is paying for the one-third of our gas coming from the Norwegian sector and how much that gas could have been bought for if British gas producers had been given a fair opportunity to compete?

Mr. Rees: The British Gas Corporation has to pay far more for Norwegian gas than that from the Southern sector. Whatever the figures, I accept what the hon. Gentleman says, but that does not mean that the companies from which the corporation purchases its North Sea gas do not do very well and do not make a sufficient profit, even with gas at a lower price.
Will the use of British Gas Corporation facilities reflect the public investment that has been made there? One of my hon. Friends asked that question. We need to know the range of prices or at least the principles upon which prices will be paid for the use of the corporation's pipes. The Bill transfers to the Secretary of State the control of planning and administration as opposed to the general supervision of the corporation's transmission and distribution system. I am advised that the need for extra staff in large numbers is conceived as arising out of the Bill. There will be great duplication of effort and a huge bill.
Moreover, there is a safety aspect. There are different types of gas. If the wrong gas is put into the wrong pipes, who will be responsible? Will it be the British Gas Corporation or the Department of Energy? Will the Department's inspectors go out into the field or will the matter be left to private companies?
Yesterday evening, I was talking, not on a narrow trade union point, to trade unionists who work in this industry. They were very worried about the safety aspects of the steps that the Government are taking.

Mr. Peter Viggers: The right hon. Gentleman said that he had consulted and talked with trade unionists about safety. Has he also spoken to gas and oil transmission company representatives? Have they given assurances about safety standards which apply in other countries and which seem to be complete?

Mr. Rees: I would willingly do that. I should like to consult the British Gas Corporation, with its expertise, if the Secretary of State would allow it. It would be a good idea if it gave its view on the matter. However, that is extremely difficult, particularly in view of what happened towards the end of last year. The hon. Gentleman makes a perfectly valid point. The only reason that I consulted trade unionists, who happened to have come for another meeting, was the problem in other directions. Certainly I should like the corporation to give its considered view to the Committee.

Mr. Gordon Wilson: Following the interesting ideas that the right hon. Gentleman advances on that, would it not be a good idea if the Standing Committee on the Bill were to operate under the special arrangements allowing the interrogation of witnesses, who could be from the


companies concerned or from the British Gas Corporation and, above all, from BNOC, so that the Committee would have their views on this?

Mr. Rees: I made that suggestion in relation to clause 4. I did not go wider because I did not want to push my luck, as the answer would be "No" on the major part of the Bill. As so little was said on clause 4 and because, with the best will on earth, so little is known about it in the Department of Energy because it is not the Department's subject, I suggested it in that one respect. It would be even better if it were applied to the whole Bill.
On the sale of assets in relation to gas, will the Minister confirm that none of the safety arrangements in the Bill deals with the necessary safety regulations required before the sale of the gas showrooms? It is most important to make that clear. I think that I have it clear, but others have not. It might be to the Government's advantage to make that clear.
With regard to our obligations to the EEC under articles 85 and 86, what is the Government's view on the policy of export oil and gas in relation to European law? Is it the view that has been put to me by others—that this will have to be tested in the courts? I read in The Guardian this morning:
BP and Shell are mounting a campaign to show that the UK landing requirement conflicts with the Treaty of Rome. Their motive is unashamed: why should they not sell to the highest bidder, even if the highest bidder is located in West Germany rather than England?
What is the Government's view about our commitment in relation to the EEC? Colleagues who were involved in this in the Labour Government tell me that EEC officials were chasing them all the time about this and that the break that the Government have made opens up the very firm possibility that we shall be in a position that is contrary to European law.
Finally, I turn to the financial arrangements. I shall pick up the comment that the right hon. Gentleman made at the end of his speech. Except to some degree in one Select Committee, I do not believe that the House has applied its mind to the financial arrangements for the raising of capital for publicly owned companies. All Governments have been hoisted by the petard of the public sector borrowing requirement convention that there is no distinction between revenue account and capital account. This can be overcome but it is not easy.
There is nothing wrong with looking afresh at the structure of the publicly owned industries. I for one do not believe that Herbert Morrison got it right in 1947–48, or that it was right in 1934 in relation to the old London Transport Board. All Governments should look afresh at structures. We should not be the prisoners of structures. I certainly have nothing against that being done. There are many working parties on this in the Labour Party. In Scandinavia there is a different arrangement for the railways, which have historically have been in public ownership and almost Civil Service-esque. On the other side, manufacturing industry is dealt with in a different way.
Much rethinking is taking place on this matter. In the TUC and the Labour Party there is consideration in a wider context of using oil revenues, as well as insurance company and pension funds, for industrial development. The whole matter is being considered. The national oil account has not worked in the way that was originally intended and the Government are removing it. Few people

will weep over that, but that does not mean that we shall not seek a different way of using North Sea revenues to invest in industry in general and particularly on the model of the Norwegian policy.
I have taken too much time, but I wish to make two further points. Mr. Conti speaking at the Royal Institute of Public Administration, asked two question which are relevant to the Government's policy on oil:
If on the other hand the idea of an administration were to allow the pension funds and similar financial institutions to Invest in BNOC is it axiomatic that these vast, somewhat impersonal and not too accountable institutions should thereby assume absolute control? Once again there is no reason not to consider charging forms. Might not institutions invest in BNOC through a trust relationship … in the course of which they might become more informative towards their shareholders and depositors?
The Secretary of State looks at me questioningly. He may be right to do so. We are seeking alternative ways of raising private capital, which at the moment is used in this country in ways that are not beneficial to the community in order to find ways whereby it can be used in the public sector.
I am not against the employee scheme, but I would be interested to know what percentage of shares would be owned by the employees and what control they would have. It is only part of a wider issue. Whatever changes there may be in other industries, our view is that the control and ownership of oil and gas must remain with the nation. BNOC should be allowed to move upstream. Nationalisation of all the companies in the North Sea is not the policy of the Labour Party. In Norway there are French and American companies under the control of Statoil.

Mr. Lawson: Does the Labour Party want a Statoil solution?

Mr. Rees: I am simply saying that that is what happens in Norway. It is not nationalisation of all the companies in the North Sea.
There were some local difficulties within the Labour Party during the last debate on gas, as the right hon. Gentleman pointed out. The Shadow Cabinet recently said:
We wish to make public and plain to any outside interest contemplating the purchase of these shares our firm resolve to restore the assets to public ownership on terms that will ensure that no private speculative gains are made at the nation's expense.
Speculative gains and how we deal with them are matters that we shall have to deal with when we see the nature of the shareholding that the Government sprock up once we discuss the order in an hour-and-a-half debate one wet Thursday night at 3 o'clock in the morning. We shall have to wait and see.
The Government won the last General Election. They are entitled to translate their promises into action but they are not entitled to do so in this hole-and-corner way without firm parliamentary control and without enabling hybridity to be investigated: that is a dodge.
Therefore, I hope that my hon. Friends will support as in the Lobby tonight. I also hope that in Committee we shall have a long, though not wasteful, investigation of every clause and schedule. We shall do that not to waste time but because it needs doing.

Mr. T. H. H. Skeet: The right hon. Member for Leeds, South (Mr. Rees) made an interesting speech and called upon my right hon. Friend to give full details


in Committee. However, when he finished his speech on renationalisation the right hon. Gentleman said that the House would have to wait to see what the terms of compensation were. The right hon. Gentleman should give further and better particulars of the compensation to be paid to divested shareholders and we should have the details now, not later. It is all very well asking the Government for full details when the right hon. Gentleman is not prepared to give them himself.
There is another matter in which the right hon. Gentleman and I are both interested—public accountability. He referred to the matter and said that the powers given in the Oil and Gas (Enterprise) Bill were vast. They will enable the Secretary of State to do many things. I referred the right hon. Gentleman to the Petroleum and Submarine Pipe-Lines Act 1975, passed by the previous Labour Government. That Act gave the Government of the day enormous powers, which were supplemented by the Petroleum (Production) Regulations 1976, which were not considered in Committee, giving a further extension of powers to the Secretary of State. In particular, model clauses 15 and 16, to reduce the amount of production, drilling control, landing rights and so on, gave enormous powers. It is somewhat surprising that the Opposition are asking for further details of the Bill when we find that the Labour Government in their legislation gave the Government even vaster powers with little information.

Mr. Rowlands: The legislation to which the hon. Gentleman referred was a long schedule that was, quite rightly and properly, subject to amendment, line by line and page by page. That is different from the proposition put forward in the Bill and the powers taken by it, which do not appear in the Bill.

Mr. Skeet: The hon. Gentleman has put forward a misconceived argument. I was a member of the Committee dealing with the Petroleum and Submarine Pipe-lines Bill and I repeatedly asked the Minister for details of the regulations that he intended to lay before the House. However, the Minister rightly said that it was impossible in the circumstances, that the regulations would have to be considered by the Department and worked out in due course. That is paralleled in the Bill.
The right hon. Gentleman referred to the articles and memoranda of association. The right hon. Gentleman is specifically interested in whether there could be any foreign control of Britoil Ltd. There is surely a simple answer to this, which could be put in the memoranda and articles of association. For example, the Alberta Oil Company is owned 50 per cent. by the people of Canada and 50 per cent. by the Alberta Government. There are strict conditions that only Canadians can own the equity capital. If the Canadians can do that, there is no reason why we should not do it here and there should be no fear of alienation of a valuable asset.

Mr. Eggar: I think that my hon. Friend will find that provisions of the kind implemented in Canada would not be possible in this country because of the Treaty of Rome.

Mr. Skeet: I shall deal with the Treaty of Rome in a moment, but it is possible to have those provisions in the United Kingdom, because the Treaty of Rome will affect companies such as the British Gas Corporation but will not affect the Government.
The right hon. Gentleman made some points about articles 85 and 86. The British Gas Corporation is affected by article 90 of the Treaty of Rome, which embraces articles 85 to 94. The status of the British Gas Corporation would be changed by the partial reduction of an exclusive monopoly but that would not affect the powers of the Secretary of State under model clause 27 of the 1975 Act, or paragraph 28 of schedule 5 of the Seaward Areas Petroleum Production Regulations 1976—that is, to insist on natural gas being landed in the United Kingdom. On the other hand, the British Gas Corporation must not discriminate against EEC companies that may desire to purchase British gas in quantities above the required rate of 1 million therms per annum as opposed to companies in the United Kingdom.
The Secretary of State could thwart delivery to a United Kingdom exporter on three grounds. First, he could insist on the landing clause—the model clause to which I have referred—that is, the gas would have to be brought to the United Kingdom, thereby making it uneconomic to export. The Secretary of State has exercised his authority on several occasions, one of which was in the Acro case. Secondly, if the exporter proposes to liquefy the gas to deliver it as LNG, the Secretary of State could withhold his consent pursuant to paragraph 27 of the third schedule of the Bill, amending section 9 of the Energy Act 1976. Thirdly, the Secretary of State could also refuse to sanction the construction of an export pipeline through controlled waters under the Petroleum and Submarine Pipe-lines Act 1975. The landing clause could be challenged in the Community courts but it is worth noting that this has not been done since 1975.
The British Gas Corporation could be in difficulties, because, as with everybody else, it is part of the EEC, but the Government would not be curtailed in the responsibilities that they exercise in the model clauses. It would also be possible in the circumstances for an EEC company—say, for the sake of argument, Gasunie—to export gas to the United Kingdom, to industrial consumers at the required rate and move it through pipelines in accordance with the terms of the Bill. Feasibility would, of course, be determined by the economics of the project, which is, after all, what competition is all about.
The right hon. Gentleman went on to list State companies operating throughout the world and asked why we should want to break up our own. He mentioned Demimex which is owned by VEBA, which is, in turn, partly owned by the State and partly by the public.
The right hon. Gentleman talked about the advantages of State corporations. He must be aware that at the time when the Government had a shareholding of more than 50 per cent., BP faced difficulties in Libya when it was turned out of the Sarir field. It had difficulties in Nigeria, where its company was expropriated for a number of reasons that I shall not go into. It applied for concessions in Turkey and Venezuela but, because the State had an investment in the enterprise, it was not possible to get concessions in either place. It is not always an advantage to have a State investment.
Let me refer to the British Gas Corporation specifically and to the sale of assets. Of course, the Secretary of State has enormous powers under clauses 9, 10 and 11. We shall look at them carefully in Committee. I wonder whether the right hon. Member for Leeds, South is aware of the case under section 13 of the 1975 Act, when National Coal Board (Exploration) Ltd. was expropriated and transferred


to the BNOC for a small amount of compensation. That was a case in which the Labour Government exercised their power.

Mr. Merlyn Rees: As I understand the hon. Gentleman, he is talking about what is in the Bill. I am saying that we shall not know what the Government are up to because they have handed the matter over to others, and it is not in the Bill. That is the difference.

Mr. Skeet: Far from it. The BNOC is covered by part I. BNOC can set up subsidiaries and they can be transferred by vesting the Secretary of State. He would then hold the shares. That is already in the Bill. The case affecting the National Coal Board to which I have referred was covered by a section in the Act. The powers were vested there. What conceivable difference is there between a company being mentioned or the provision of general powers? I would have thought that either case was simple.
In another case, the Government shareholding in British Petroleum was reduced considerably. That was done by a Labour Government for economic reasons.
There is another point about gas that I consider important. If we are to divest all the oil interests of the British Gas Corporation, we should take into account the gas-oil ratio with regard to the several fields. This may be a Committee point, but I feel that my right hon. Friend should consider it. For example, in the Beryl field, the gas-oil ratio is 1,500. In Fulmar, it is 380. However, it is of no great consequence in the other three fields—Hutton, North-West Hutton and Montrose—which could be transferred immediately. If the first two are to be transferred, some provision should be made so that, in the first instance, the BGC should have an option to purchase the Gas.
It was the attitude of the British Gas Corporation, which paid such a poor price to the producers, that frustrated the development and discovery of gas supplies, and that led to a gas shortage. At the time, I can remember talking about 2.87p per therm. The other day, the chairman talked about an average price of roughly 10p per therm. For new contracts, if customers can get them, it is charging well over 40p per therm. On firm contracts, the price is 29.5p per therm. BGC is making an enormous profit.

Mr. Merlyn Rees: For us.

Mr. Skeet: It is not necessarily for the right hon. Gentleman. This is a State corporation. I thought the right hon. Gentleman regarded the BGC as a commercial enterprise. He is only a 55-millionth part-owner. We are seeking to give it to the people who have put their money in it as well as to the employees. It is superior to do it that way.

Mr. Douglas: The hon. Gentleman is knowledgeable in these matters. Will he indicate an oil equivalent price for gas at present, if we take the price of oil at roughly $34 to $36 a barrel?

Mr. Skeet: I dare say that if we compared an oil price equivalent with parity, it would be very much higher. The gas price approxiamates to that of gas oil, and it has been brought back to about 29·5p per therm, but for new contracts it is well over 40p per therm. That does not reach oil parity, but it is a high price to charge above that charged in Europe.
My general impression of part II, which deals with the gas industry, is that it is a catalyst for change, but care

must be taken not to claim too much for what it will achieve. The size of the BGC monopoly affected is likely to be small, at most between 10 per cent. and 15 per cent. of the market—the lowest value sector of the interruptible market. An effective source of supply through aggregating gas fields and the development of a sales network through the pooling of company interests may take up to seven years to establish and in the absence of storage facilities fallback supplies may be required from the BGC.
It is important to recognise that the BGC is not without its defences. By using cheap gas, it could undercut its competitors. I refer the House to the report of the Monopolies and Mergers Commission for 1979–80, House of Commons Paper 703, where paragraph 13.63 on page 98 cites evidence that the corporation has subsidised the sale of appliances out of the gas account. On average, it is buying gas at roughly 10p per therm. If BGC were negotiating with the oil companies it could undercut them. Therefore, in the early stages of the game—in the first seven years—I do not envisage a great impact on this market.
The Pipe-lines Act 1962 and the Petroleum and Submarine Pipe-lines Act 1975 provided for the transport of gas and liquids by pipeline. There is further provision in this Bill. Care must be taken to ensure that we have a standard set of rules, not a specific set for the private sector and another for public enterprise.
We only have to look at clause 17. I take it that that clause will be used primarily. First, there will be negotiations with the BGC, with right to appeal to the Secretary of State, but there is no information provided by which the oil producers can establish the position, the character and detail of the corporation's own pipelines. There should be a statutory right to information by someone who wishes to make use of the clause.
I have in mind information about the corporation's trunk and secondary pipelines, identified on maps, relevant capacity of the lines, a choice of economic routes between key points and technical details of the pipeline system used. Tariffs should be published, otherwise it will not be possible for the intended user to quote a price to the customers.
None of those points is covered by clause 17, and there is no requirement that that should be so. Clause 17(2)(a) is interesting, and for the benefit of the House I shall read it out. It states that the directions must not prejudice
the quantities of gas which the Gas Corporation requires or may reasonably be expected to require to be conveyed by the pipe-line in order to secure the performance by the Corporation of its statutory duties and contractual obligations".
Who in private industry would put forward a case to the corporation when he does not have the remotest idea about the information involved and has no method of discovering it? On whose shoulder is the onus of proof? If it is on the company's, it will not have access to the information, and the BGC, which knows it all, can be sparing in giving details. It can filibuster for a considerable time, thereby holding up the application. As the clause stands it would be difficult for the Secretary of State to fault the case of the BGC. That should be looked into by the Department and there should be a standard set of rules.
Unfortunately, in this group of clauses, particularly in clause 17, there is a built-in delay period. Let us take the steps involved under clause 17, the one that is most likely to be used. Formal application under clause 17 could take anything up to three months, and probably longer. The


opportunity for the British Gas Corporation to be heard will probably take six months. There are substantial hurdles, to which I have already referred, in clause 17(2)(a), the direction and notification by the Secretary of State under clause 17(3) and modifications, if necessary, in the earlier stages under clause 17(4). Next, there is the period by which the British Gas Corporation and/or applicant must comply with the terms—say, six months. All told, the time taken could be one and a half years or even more.

Dr. Mabon: It sounds like trunk roads.

Mr. Skeet: It may sound like trunk roads, but these are trunk pipelines and the applications, simply to gain access to an existing pipeline that is owned by the British Gas Corporation, will take a considerable time.
The Secretary of State rightly said that he will be the arbiter. I am heartened by the fact that he said that the responsibility may not always be with the Department of Energy and that it may be hived off to an independent body. However, it is right to start with the Department of Energy because I do not believe that there will be many applications in the initial stages. If at a later stage there are more applications, perhaps a body analogous to the Texas Railroad Company or another similar body could be utilised.

Mr. Dalyell: Does the hon. Gentleman share the misgivings of some hon. Members about the shortage of skilled personnel who are able to do the work? There are not many people around who can do the task.

Mr. Skeet: The Department is considerable, but in my judgment there will have to be a movement of personnel to deal with some of the work, depending on the number of applications. I do not assume that there will a great deal of work for the Department in the earlier stages. As I said, the British Gas Corporation in its negotiations with individual customers will have to do much of the weeding out in the first place, long before applications come to the Department on appeal.

Mr. Dalyell: The hon. Gentleman talks about "weeding out". Weeding out of whom, by whom?

Mr. Skeet: The first application will be made to the British Gas Corporation, which will try to settle the arrangement. It may decide that there is nothing in the case, and the case may then go to appeal. However, the BGC may be able to settle some of the cases initially and grant access. That is what I mean by "weeding out" cases.
I come now to BNOC. I congratulate it on the way in which it has developed over the years and on its initial chairman, who has supported the Government's case under this Bill. I should like to put before the House what I consider to be the specifications of the new companies involved. BNOC would become a statutory corporation funded from the National Loans Fund. It would be a broker in crude oil and petroleum products. Although downstream powers would be retained, the use of them would probably lapse. The corporation would also establish posted prices for North Sea oil in conjunction with the other producers. Britoil Ltd. will be set up under the Companies Act with a memorandum and articles of

association. The company would be involved with upstream operations for the industry—exploration and production—both in the United Kingdom and abroad.
As we have learnt today, Britoil would be obliged to enter into a participation agreement with the Department of Energy and BNOC covering 51 per cent. of its equity oil. We have learnt today that the figure may be even higher. The balance will be available for sale on the market. The company will be free to move downstream into refining and marketing, if so advised. The powers will be outlined in the memorandum and articles of association, which will make the company another integrated oil company, like many others which have share quotations. There would be no connection between BNOC and Britoil except through the Department of Energy. That relationship should be correctly stated.
Further, if there is to be departmental involvement, it is right that the shares of the company should be held by the Department of Energy. However, I believe that if detachment and financial rectitude is sought it should be for the Treasury to hold the shares. After all, fairly recently, the Bank of England transferred the shares in BP to the Treasury. Why could not the shares in Britoil be held by the Treasury? If they are held by the Department it will have every opportunity to intervene.
There are lapsed powers. BNOC will not need to go into exploration and production. The 1975 Act could be revised. Statutes have to be revised from time to time. One that is outstanding is the National Coal Board (Additional Powers) Act 1966, which still enables the National Coal Board to explore the North Sea, which it has not done for years. The Act should be amended. The Act under which the British Gas Corporation would have to sell its oil—in this case to BNOC—could also be revised.
I said in May 1975 that a better course would have been not to break up BNOC, but to privatise it as an entity. I realise that there are difficulties. The Treasury might oppose it. Why not privatise the entire company, not just an integral part of it? There are many analogies for that. There is VEBA in the Federal Republic of Germany, Elf Aquitaine in France, which has a part State shareholding, which is held by ERAP and a part shareholding held by the public, and is quoted on the French Bourse. There is also the CFP, which is 35 per cent. owned by the State, with the rest held by the market.
Let us consider the existing BNOC. It has recoverable reserves of 7 per cent. of the 11·5 billion barrels a day recoverable reserves from the 26 fields which are producing or under development. It is the largest holder of licences in the United Kingdom and has an equity interest in 165 blocks and is operator in 42. In production, BNOC trades in equity, royalty and participation, crude oil, which is a substantial part of the North Sea total, and petroleum products. That is the enterprise that is to be split.
The only difference between the Secretary of State and myself is that he would privatise an integral part of BNOC. I would privatise the lot, with the Government retaining a 49 per cent. share. I believe that that is an eminently reasonable suggestion and I commend it to my colleagues. I doubt whether it would commend itself to many Opposition Members. If, as I must, I accept the Government's judgment, let us look at the status of Britoil. Its crude oil availability becomes reduced to only 100,000 barrels a day from which both royalty and participation


crude must be deducted. Thus, it would rank as a small North Sea oil company, like many others with growing potential.
Substantial liabilities or commitments remain, due to a large number of blocks under rounds five and six in which the company has an equity interest. BNOC is an equity partner in 165 blocks and an operator in no fewer than 42 of them. This will be a very expensive liability on Britoil unless ways can be found of hiving off or farming-in by third parties in some of the corporation's acreage.
I hope that the Minister of State will be able to give the House a good statement on what steps have been taken since the original commitment, which was undertaken by the Labour Government in both rounds five and six, to reduce this load. Otherwise this will be a disincentive to buy shares in the market.
The BNOC has been very active in oil exploration, ranking second after Shell. The corporation has made relatively few discoveries of any size. It has discovered no fields on any grand scale. The Thistle and Ninian fields were acquired from the Burmah Oil Company and others. Substantial exploration expenditure commitments remain and these could be aggravated by development commitments later on unless the system is suitably revised. I mention those points because I believe that there should be a clear understanding of what the case involves.
I support the Government in what they are doing. It is not exactly the way that I would do it, but it is privatising, it is giving to the public an interest in their own corporation, like many of the companies that are quoted now on the Stock Exchange. Many of them have been very successful in their own right. Let us make no mistake about that. But for the private sector the North Sea would never have been exploited and developed. It was only later on that the State came in and decided to acquire rights. Before hon. Members jump up with great enthusiasm, let me say that the Secretary of State has enormous controls already. He is not giving up any part of this. He is making certain modifications.
I make a final plea to the Secretary of State to give us a Keeling schedule to deal with the schedules, which are extremely complicated. I have put them together, but hon. Members should have a clear understanding of all the bits and pieces of schedules. The details should be shown where they slot in, if hon. Members are to treat them sensibly in Committee.

Mr. Robert C. Brown: The speech of the Secretary of State was unworthy of a holder of such high office. Workers in the North Sea oil industry, its suppliers and ancillaries will have taken note that such is the Government's attitude to industrial safety, the Secretary of State did not even deign to devote one paragraph of his speech to this most important issue, particularly in an area which has claimed so many lives and horrifically injured so many operatives.
I have a vested interest in the debate in that I am a Member sponsored by the General and Municipal Workers Union, which organises the bulk of the workers in the gas industry. I worked for 30 years in the industry before I entered the House. Secondly, my major vested interest is as a member of the British public, one of 15 million people who are gas consumers and have installed gas as a chosen

fuel, firm in the knowledge that the British Gas Corporation has a statutory duty to maintain a constant supply.
The subject of rape has recently created a great furore in the media and among the public, and rightly so. Here is a Secretary of State, ready, able and willing to rape 15 million gas consumers. I hope that the media will express their outrage on behalf of gas consumers, but I harbour grave doubts. Indeed, tomorrow morning the media may seek to legitimise rape when the offender is a member of Her Majesty's Government.
The Bill is the greatest exercise in asset stripping ever seen. It is based on the political dogma that anything that is privately owned is bound to be more efficient than anything that is State owned. There is little doubt that the Government are determined to throw some carrots to the backwoodsmen below the Gangway.

Mr. Archie Hamilton: Does the hon. Gentleman agree that the spur of competition makes industries more efficient?

Mr. Brown: That is a myth which I expect the hon. Gentleman to trot out. In spite of what the Secretary of State said about the Bill in his opening address, and the address that we shall have from the Minister of State in winding up, there is no doubt that hon. Members on the Government side are dearly anxious to have the complete dismantling of the nationalised British gas industry and no less is their aim. The hon. Member for Bedford (Mr. Skeet) clearly indicated his prejudice on that matter.
The mythology about competition flies in the face of experience, particularly with reference to the two corporations concerned in the Bill, BNOC and the British Gas Corporation, both of which have been highly efficient and have served the British public extremely well.
The Bill is so enormous that it is difficult to know at which point to start to attack it. All parts are equally bad. If the Bill becomes law unamended, it could be reasonably referred to as a major act of piracy against the British public. That is the way I see it.
My main interest is security of supply. No one can argue that the Bill does not fundamentally threaten the security of supply. It does so in a number of ways. First, effectively restricting the British Gas Corporation's role to one of a supplier of 25,000 therms or less, means that anyone who wishes to use gas for any purpose whatsoever, regardless of its efficient use, can do so irrespective of a sensible depletion policy. It is true that the Secretary of State must give permission for use between 25,000 therms and 1 million therms. The Bill does not say what criteria the Secretary of State will use to grant that permission. For example, will he allow his friends in Tory councils to come to cosy deals with the oil companies to supply gas for schools and hospitals, gas which may be cheaper at the beginning but then will soar in price? Will the Secretary of State allow gas to be used for bulk steam raising? There is nothing in the Bill which says that he will not do so.
It is not enough to say vaguely, as the Secretary of State has done, that he believes that he has the powers to deal with depletion. I do not believe that he has such powers. We need a firm and legally binding statement setting out the reasons why permission will be given or withheld.
The outlook becomes bleaker for quantities of over 1 million therms. Anyone wishing to use 1 million therms or more will be able to do so without any let, hindrance


or restriction. It makes absolute nonsense of any sensible depletion policy and it is a sop to those industries which have sought to blame energy prices, and the gas industry in particular, for their financial difficulties, instead of putting the blame where it should lie—on high interest rates, and on the demand that gas prices should be increased by 10 per cent. more than the going rate of inflation. That is what industry should criticise, not the policy that I have just mentioned.
This mortgaging of our future would be disgraceful if we knew that the supplies of gas were infinite, but we know that they are not. We know that the upper range of supply is likely to last 25 years, but only if there is a sensible depletion policy. The Bill throws any depletion policy out of the window. The result is that, to maintain domestic supply, BGC will be forced to bid higher and higher prices for increasingly scarce gas supplies, and that must be reflected in higher and higher prices to the British gas consumer.
Another serious point emerges. The British Gas Corporation will be forced to carry the gas—on what terms we do not yet know; nor does the Secretary of State. What would happen if we had another winter like this? What would have happened in the past eight or nine weeks to the thousands of old people who are at risk? We know that already hundreds of old people have died of hypothermia. What would have happened to the thousands of old people, babies and extremely young children whose supplies were cut off when BGC could not maintain its supply because it had lost the use of the interruptible clauses in its supply contracts with industry? The Bill makes no provision for contracts from private suppliers to interrupt supply under these or other circumstances, such as a loss of a supply line from the North Sea. The Secretary of State has made no effort to respond to that urgent question.
What will happen when the gas runs out? The Secretary of State pretends that the Bill is a magic wand which, when waved over the appropriate parts of the North Sea, will produce unlimited new sources of gas. That is the essence of free competition to which the hon. Member for Bedford referred. I say to the Secretary of State that it is not as easy as that. Indeed, it is made more difficult by his confident assertion that, while the benefits of privatisation will mean that oil companies will have the incentive to explore, prices to the consumer, particularly industry, will fall. That is simply nonsense. All that will happen is that prices will rise, and the likelihood of further exploration—unless prices perhaps treble—is minimal. At the same time, supplies will deplete more rapidly, bringing closer the time when we are forced to abandon natural gas as a major contributor to the national energy balance.
The uncontrolled depletion will have a major effect on the coal industry—I come from a coalfield and I am not pleased about that. Major industries in this country are only just beginning to use coal for bulk steam raising, and flooding the market with unlimited supplies of gas will harm the industrial sales of coal quite appreciably. That, in turn, will force further pit closures and cause further unemployment in areas such as Scotland, the North-East, South Wales and Lancashire. When the gas runs out, it will be too late to start looking for coal to supply our energy needs, or for the large amount of coal that is required to manufacture synthetic natural gas.
I want to put five questions to the Secretary of State, and I hope that the Minister of State will answer them tonight. What happens to BGC's power to explore for gas and oil? If BGC explores for gas and finds oil, what happens? Is the Minister sure that prices to industry will fall? I suspect that the answer to that question will be that competition always cuts prices. If that is the answer, how does it square with the higher prices that the oil companies are bound to expect? What happens to the balance of peaks and troughs in demand? None of those questions is frivolous, and I hope that we shall be given answers to them tonight.
The policy of my union and of all the other unions in the gas industry is to recognise that gas supplies are finite and must be an integral part of a balanced energy policy, making the best use of all fuels for the longest possible period. All United Kingdom energy sources should be controlled by the Government in the national interest. Prices to the oil companies should be held down to protect the consumer, because Britain's economic difficulties will be worsened if the nation's assets are sold off at give-away prices. There can be no doubt about that. In short, the Bill sells our heritage for a pittance and ensures at the same time that the framework is established for squandering our energy future.

Dr. J. Dickson Mabon: I had expected another speech from a Government Member, with whom I should have been delighted to cross swords. However, no doubt that will happen on another occasion.
May I say, uncharitably, to the hon. Member for Bedford (Mr. Skeet) that I hope that he is not chosen by the Committee of Selection to serve on the Standing Committee, because I do not wish the Bill to be guillotined, because of his misbehaviour or that of anyone else. There are times for detailed arguments, but sometimes the hon. Gentleman tries even my inordinate patience.
The hon. Gentleman complained about the immense powers in the Petroleum and Submarine Pipe-lines Act 1975 and said that Opposition Members who had been associated with it could not complain about a Bill of this nature. The fact is that the powers in the 1975 Act are more or less retained. The Bill contains five or six substantial amendments to the 1975 Act, and on page 58 there are about 10 quite logical drafting amendments. I therefore insist that the 1975 Act, in that it is essentially retained, cannot be said to be all that bad. It had the merit of being specific whenever specific proposals were necessary. It is a somewhat twisted argument to complain that when BNOC was formed, somehow or other we raped the National Coal Board and stole several assets from the British Gas Corporation and put them into this monstrous new oil corporation. That is a fantasy. All that we did was to transfer one set of public assets from one form into another, to make the system more logical.

Mr. Skeet: The right hon. Gentleman is not quite right. If he looks at pages 50 and 51 of the Bill, he will see that there are quite sizeable amendments to the regulations which were made under the 1975 Act. The Act is therefore not quite as acceptable as he says.

Dr. Mabon: I do not complain about that criticism of what I said, but I maintain that essentially the Act is intact.


There is one difference between the 1975 Act and the Bill, with which we profoundly disagree, and with which any parliamentarian of any party would disagree, although admittedly when one is in Government the temptations to original sin are sometimes overwhelming. However, a parliamentarian—Government Back Benchers certainly cannot exempt themselves—must not go along with the concept of negative procedure on matters of such substance. We must not rely on the Secretary of State's assurance—who would trust a Secretary of State on such a matter?—that successive Secretaries of State and Leaders of the House would also give the House time to debate every negative resolution. That is nonsense.
Furthermore, it is a fair criticism to say that these negative resolutions need not be specific. The monstrous part of the Bill—everyone with whom I have been in contact agrees with the point—is the complete opacity of clause 2. It may be a rather clever manoeuvre by the draftsmen of the Bill, who advised the Government that the way to escape the horrors of hybridity, such as we had on the Aircraft and Shipbuilding Industries Act 1977, was to disguise the whole intention in clause 2.
I submit that the Government will not get away with that. They will fall foul of themselves in Committee unless they are more specific. They will fall foul on Report and in the House of Lords. Even if the Bill is passed, they will fall foul of the Upper House and this House by the time they try to put through the so-called orders flowing from it.
In other words, by being too clever by half, as the late Mr. Macleod would have said, the Government are ensuring that they will not achieve what they set out to achieve. Perhaps that is a reason for saying that we welcome clause 2 and that we are glad that it is self-defeating in its purpose. However, the Government must take seriously the criticisms that are offered by many outside the House, quite apart from those inside the House, who complain about the nature of clause 2.

Mr. Rowlands: The right hon. Gentleman should also draw the House's attention to the fact that clause 2 is not subject to any form of parliamentary approval. None of the orders—not even the negative procedure—applies to any aspect of clause 2.

Dr. Mabon: I stand corrected. I accept that statement, which supports the criticism that I have made—that it is a bad Bill. The Bill must be considered carefully in Committee. I suspect that whole sections of the Bill will have to be taken away and rewritten. It will not be the first time that a Minister has done that: I have done so on occasion.
I remember listening earnestly to the hon. Member for Bedford and others like the hon. Member for Derbyshire South-East (Mr. Rost), in Committee on the Energy Act 1976. The Government were clearly wrong in what they were proposing, so they took away four clauses and rewrote them. Of course, that was a no-win situation. The fact that we saw the mistake and corrected it meant that we were blamed for the mistake in the first place. However, it was proper and prudent for the Government to make that correction and to suffer the indignity of doing right.
The Government will find the matter difficult in Committee. I do not know who is responsible for such matters, but I earnestly hope that I shall be on that

Committee. It will be a long slog. It will be an interesting Committee that must consider carefully the sections of the Bill that deal with fundamentals. I shall deal with part IV in a moment.
Another criticism I have deals with the un-Conservative intervention of the Secretary of State into an arbitration involving anyone who proposes to use the national gas line system as a common carrier. If there is a dispute between the British Gas Corporation and someone who wishes to use the gas line grid, the arbitrator is to be the Secretary of State. That is most un-Conservative.
I believed that no one could be more Right-wing than the Secretary of State, but the hon. Member for Bedford has proved it. That is why the hon. Gentleman encourages the Secretary of State to set up another independent arbitration machine. That machinery will require more than 40 or 50 members, as stated in the section of the Bill that deals with manpower.
The Department of Energy is not a large Department by Whitehall standards. It is a highly efficient Department. I was proud to serve in it, as, I am sure, is the present Minister of State. The loss of 40 or 50 people would be a large one for that Department. If it means that 40 or 50 people must be sacked elsewhere, I wonder how the Department can carry on. Whole sections of the Bill deal with petroleum engineering and production licences, quite apart from the safety provisions, which to my mind imply that the Department must be substantially larger as a result of the Bill and all that it throws upon a responsible Secretary of State.
My major complaint—apart from the opacity of clause 2—is that the Secretary of State has not told us about the memorandum and articles of association of Britoil. I believed that today's debate would be a rerun of the old movie that we saw on 10 November and that we should hear the same speeches from hon. Members, including myself. However, that has not been the case. The Secretary of State has made major changes to that which he postulated on 10 November. He told us that he would have a temporary majority of 51 per cent., although he would hold only 49 per cent. of the shares. I do not know what the word "temporary" means. If it means that he moves decisively every time that an important change must be made, he has a permanent majority.
The idea of a temporary majority is nonsense. Either he has a majority or he has not. He will own 49 per cent. of the shares with a 51 per cent. right of decision. That is a major change. We were stunned when the Secretary of State in November proudly boasted that Britoil would be a corporation that had only 49 per cent. of the equity. I suppose that he was pushed hard in the Cabinet even to reach 49 per cent., but it is a major switch. That matter is not in the Bill.
The Secretary of State mentioned many other important matters. He said that there would be a take-up by Britoil of the equity given to BNOC in rounds five and six. We mentioned this point in the debate on 10 November and we received no answer from the Minister, although I do not complain about that. I share the scepticism of the hon. Member for Merthyr Tydfil (Mr. Rowlands): it is wrong that we must take the word of the Secretary of State tonight about what he believes will be in the memoranda of association. I have not been able to grasp the small print of what the Secretary of State said, because I was amazed


by such a shift in position. Clearly, the Government have taken rather a different view when they are faced with the practicalities of dealing with the participation agreements.

Mr. Eggar: Is not the right hon. Gentleman grossly misrepresenting what the Secretary of State said? Did not the Secretary of State make it quite clear on 10 November that he would safeguard the British interest and control of Britoil? Did he not say earlier in that debate that the only circumstances in which the Government would take over the additional powers from 49 per cent. to 51 per cent. would be if British control was going to be lost, or if the directors were to be changed?

Dr. Mabon: It is not a matter for me grossly to misrepresent the Secretary of State or for the hon. Gentleman to defend him wrongly. It is a matter for Parliament properly to decide in the full—

Mr. Eggar: rose—

Dr. Mabon: The hon. Gentleman must not be impatient and unparliamentary. He must listen. Parliament must endorse the nature of the articles of association, otherwise we are simply allowing the Secretary of State to decide to change his mind whenever he wants and to give us in the beginning articles of association which we have all presumed to be in a particular form but which turn out to be quite different. I suggest that that is wrong.
The Minister of State will have many things to answer at the end of the debate, and no doubt there will be the usual political punch-up, but there is one matter of substance with which I should like him to deal. I want him to give a solemn promise that we shall have the articles of association at the beginning of the Committee stage. That is a fair request. It is a matter of plain parliamentary fairness. We need to have the papers before us—as is said in the other place—together with the common facts on which hon. Members can base alternative arguments. It is unfair of the Government to advance the Bill without making the articles of association known in detail.
The hon. Member for Enfield, North (Mr. Eggar) chastised me on a previous occasion for talking about the prejudicial position in which the British people would be placed under the Treaty of Rome if we allowed the exclusive right to land oil in the United Kingdom to be challenged by our European partners. Indeed, the hon. Member for Enfield, North said that that was a Foreign Office argument, but sometimes the Foreign Office has good arguments, and this is one which deserves an answer.
It is possible that France might claim the same right, and might stand with us in the Council of Energy Ministers in resisting the claim that there is a breach of the understanding of our 1964 Act and of the treaty of 1972. That is an argument, incidentally, that the right hon. Member for Bristol, South-East (Mr. Benn) and I heard many times at the Council of Ministers when we served on it between 1976 and 1979. It is not a romantic, nonsensical or irrelevant argument; it is a real argument. I should like the Government to be sure of their position in this respect. I suspect that the Secretary of State's references to the memorandum relating to a certain paragraph were in order to defend the United Kingdom if we are attacked in the European Councils in regard to a change of circumstances.
The Minister of State has had a hell of a time. I hope that you will forgive the language, Mr. Speaker, but it can only be described—

Mr. Speaker: Order. It is the second time today that the expression has been used. We must maintain our parliamentary standards.

Dr. Mabon: I agree, Mr. Speaker. The Minister has had an infernal time in his own constituency and elsewhere. He has lost the gas-gathering pipeline, although that was not entirely his fault. He has lost the Invergordon smelter—again, not entirely his fault, but there we are. But I give him credit for scoring a bull point in having Britoil—if it is ever created—established as a Scottish-based company. Scotland is part of Great Britain, and if Britoil is registered in Scotland, it will not only bring administrative work to Scotland—where a large claim is made concerning the origin of the oil—but will allow contracts to be made and litigation to be heard under Scots law. The case for that is well argued in page 84 of the report on the proposed merger or bids by two banks for the Royal Bank of Scotland. Therefore, in a completely non-partisan way, I say "Good luck" to the Government in having made the right decision, and I hope that they will stick to it.
If Britoil emerges as a company, I hope that BNOC will still remain in Glasgow, even though it is a State trading company, and that Britoil will be based in Edinburgh, in Aberdeen, or somewhere else in Scotland. The important point is that the company should be registered in Scotland. I do not make this point as a nationalist; I am an internationalist. When BNOC was created, it operated under English law, and a great deal of work was naturally taken to English lawyers and to English courts, whereas Scottish lawyers needed more assistance in this respect.
I agree wholeheartedly with what the right hon. Member for Leeds, South said concerning safety. I recall the setting up of the Burgoyne committee, the work of which has probably contributed largely to part IV of the Bill. Earnest work has been done by the much-criticised multi-national oil companies in regard to the blow-out in Ekofisk. That was not in our United Kingdom sector but we had the knowledge that mathematically it was more likely to happen in our sector than again in the Norwegian sector. We took steps, and with enthusiasm the oil companies helped to create and build the emergency support vessels, one of which has just been built in my constituency. The Government gave the Shell one away to Finland, but our Government were able to make sure—[Interruption.] I was not in the Government at the time. The order for the Shell vessel was dispatched in 1979 by the then Secretary of State for Industry, who is now the Secretary of State for Education and Science, but the other vessel has been built in Britain. We now have the safety zone principle, which is rehearsed in the Bill. It was known and recognised earlier by the oil companies in their plan for five sectors. In making these points I refer also to the trade union committee and to the work done by many other people in regard to safety.
It is wrong that part IV should be in the Bill. It should be in a separate Bill that would be less contentious than this one will be, by its nature. The Government are muddling matters by including part IV in the Bill. It may be that if the hon. Member for Bedford and certain other hon. Members are appointed to the Committee, the Bill


will be guillotined at round about part III, so that in effect the axe will fall on part IV. That will be tragic. I hope that the suggestion about taking out part IV or having a new procedure will be looked at carefully. I respectfully suggest to the Minister that he should take out part IV and make a separate Bill of it.
As the House will have gathered, I and my right hon. Friends disagree profoundly with the Bill, and I hope that it will be defeated.

Mr. Peter Rost: The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) has clearly learnt fast since his promotion as a spokesman for the Social Democratic Party. He has revealed about as much of that party's energy policy as we know about any of its other policies. There has been a little nit-picking but no substantive argument against the Bill. After listening to him carefully, I am thoroughly confused as to why he concluded his remarks by saying that he would oppose the Bill in principle.
The other Opposition Members who have spoken seemed to be struggling hard to find any argument against the Bill. There has been the most extraordinary inconsistency. The hon. Member for Newcastle upon Tyne, West (Mr. Brown)—in a speech which attracted my sympathy and, to some extent, my support—argued the case for gas depletion in the national interest. I would go along with him. Surely, however, it is rather inconsistent to suggest that with legislation, by introducing more competition, we will deplete our gas reserves more quickly on the one hand, and then for the right hon. Member for Leeds, South (Mr. Rees) to argue from the Front Bench that this Bill, by introducing more competition, will raise prices. Hon. Gentlemen cannot have it both ways. The hon. Member for Newcastle upon Tyne, West is suggesting that gas will be used up more quickly because competition will reduce prices and therefore expand the market even faster than it is already expanding, and his right hon. Friend is saying the opposite, that prices will rise as a result of this Bill, presumably leading to less consumption. Which is it to be?

Mr. R. C. Brown: Clearly the hon. Gentleman was not listening to the nub of my argument very keenly, or he would have understood. I am against depletion. He said I was advocating it. I was advocating a depletion policy whereby we could control the rate at which our North Sea gas is dispensed. Once we introduce this million net therm provision for industry, inevitably the price will rise and the rich resource of North Sea gas is bound to be depleted more rapidly.

Mr. Rost: I certainly understood the hon. Gentleman's argument, but I fundamentally disagree with him. If British Gas had really been concerned about conserving finite gas resources, if it had really been concerned about a depletion policy, it would not have over-exploited the market, particularly the domestic market, by under-pricing gas in the early years and deliberately knocking out competitor fuels, such as oil, coal and electricity. In fact, British Gas went through the pretence of propounding a depletion policy by saying that it was preserving gas as a premium fuel, whereas in reality it exploited the monopoly that Parliament gave it by a ruthless and aggressive marketing policy that so rapidly developed the market for

gas that anyone who was not a complete idiot turned off any other fuel and demanded gas, until the market had developed so rapidly and the incentive for the development of our own gas reserves was so diminished, because British Gas was not prepared to pay a fair price, that it was forced to buy gas from the Norwegian sector at much higher prices. So much for the British Gas depletion policy.
My argument in support of this Bill centres around what I regard as the most important section of it—the long-overdue breaking up of the British Gas monopoly. We cannot blame the British Gas management for having exploited and abused that monopoly against the national and consumer interests; we should be blaming ourselves. It was here in Parliament that the powers were given to British Gas to exercise that monopoly, and, of course, it was the last Conservative Government who were responsible.
At least we are now repenting, which is more than previous Governments have been prepared to do. We are prepared to admit that the powers given to British Gas were too great and have worked against the national and consumer interests, and we are now prepared to put this right.

Mr. Arthur Palmer: I do not think that the hon. Gentleman was in the House at the time, but the Labour Opposition opposed that Bill very strongly.

Mr. Rost: I am well aware of that. I was on the Committee myself and was one of those obliged, somewhat reluctantly, to support it. As a new boy I was, perhaps, not mature enough to have sufficient reservations. I admit that I am just as much to blame as the others who created that British Gas monopoly.
The argument I wish to develop in my case, that British Gas has abused its monopoly and that, therefore, this legislation is long overdue, can be made on several points. It is without question a fact—the evidence is there—that because it had the monopoly power to buy gas from producers and, of course, the monopoly power to sell and distribute, British Gas was able to purchase and subsequently sell gas, particularly to the domestic consumer at far lower prices than would have been the case
It may be said that that was to the benefit of the consumers in the early years, and indeed it was. However, it has led to the deception of consumers because they were led to believe that gas would be cheap and plentiful. They invested in gas domestic heating and are now finding that, as with other commodities, a market price, a world price, eventually has to assert itself, based upon supply and demand. Simply because we are already having to buy one third of our gas from the Norwegian sector—and they are not letting us have it at below market prices—we are already finding that those cheap and plentiful supplies of gas that we were promised are no longer a reality.
Of course, there is still plenty of gas. We have barely started developing it within our own North Sea and this too is because of the British Gas monopoly, because, in order to try to over-develop, over-exploit, the market for gas, British Gas was more concerned with screwing down the price to our own British North Sea field producers than with paying a rising price that would have provided the reward—or at least, a return—for the high investment that would have been required to bring that gas home.
The monopoly has been abused in this sense, that we have neglected to develop our own North Sea gas. There is plenty there. It is an embarrassment. There is probably enough for up to a hundred years, and, as the Norwegians have found, there are very substantial reserves of North Sea gas available. However, it is an embarrassment at the moment because the oil companies have not been offered a fair price for it.

Mr. Eggar: Would not my hon. Friend agree that one of the deepest concerns and one of the results of the BGC monopoly is that some private oil companies now predict that we will run out of gas or cease to be self-sufficient by the end of the 1980s?

Mr. Rost: Undoubtedly this is accepted, and this is why my right hon. Friend and the Government have brought forward this legislation. I have no doubt at all that incentives will quickly be created for the development of more supplies. I would further suggest that one of the main reasons why British Gas is opposed to this legislation is that it is afraid that so much gas will come forward from the incentive that will be provided that it will undermine the long-term contracts that it has with Norway because it will be seen that British gas will be offered in competition perhaps at a lower price than British Gas has had to pay in the Norwegian sector. I have no doubt at all that if British Gas had not exercised its monopoly power to hold down the price it was prepared to offer to producers in the British continental shelf, we would now be flooded with sources of gas at prices somewhere between those paid in the early development of the southern North Sea basin and the price we are now having to pay the Norwegians, prices that would have offered a good return to the producers and a much fairer deal to the consumers than we are faced with now in having to import so much of our gas.
I also believe that British Gas has to answer for the under-development of our continental, offshore energy resources with regard to associated gas. If this legislation had come forward some years ago, or if British Gas had not been given the power to use its monopoly, I believe that pipelines would now have been built by the oil companies and more associated gas would have come ashore rather than being flared. Why is the gas flared? The reason is that it does not pay to pipe it ashore.
Why have our petrochemical and other high-energy consumers suffered? Why have other consumers who use gas as a feedstock suffered and gone out of business? Why have we lost to foreign competition? The reason is that we have not used the abundant gas associated with oil production in the North Sea. British Gas has held down the price so that it does not pay the private sector to build pipelines and sell the gas to our petrochemical industry and other feedstock users. Competition is desperately overdue. We need the petrochemical industry. There is no reason why it should be outpriced against European petrochemical firms when we have the resources. We are not marketing and exploiting those resources. They are waiting for us, if we can provide a reasonable incentive.
British Gas has rationed industry and overcharged at the same time. The arbitrary decisions that a monopoly is allowed to take about who it supplies and at what price have not been in the best interests of the British economy. The domestic consumer has been subsidised. The domestic consumer might believe that he has had a good deal, but

that he is not getting such a good deal now because prices are rising. Domestic consumers have a better deal than industry, which has been deprived and messed around because British gas has not developed the reserves as it could if it had had more competition.
There is shortage amid plenty. That is always so when nationalised enterprises or State corporations intervene. As with food production in. Russia, shortages exist amid plenty. The exploitation and exploration of North Sea gas have been frustrated unnecessarily and now need an important boost if we are to maintain our supplies.
The monopoly has abused its powers in another way. In the long term it is perhaps more serious than the aspects that I have already discussed. British Gas, along with the electricity supply industry monopoly, has abused its powers in a way that has damaged the consumer far more seriously than the nation realises. By its pricing policies British Gas has sabotaged the development of district heating and combined heat and power schemes. It has deliberately frustrated the development of co-generation in industry, which could be doing for us what it is achieving in many European countries, where people do not have to shiver and freeze in their homes because they cannot afford enough heat.
About 3,000 district heating schemes exist in Western Europe alone. Many are fired by gas. It is a premium fuel but it has a higher efficiency than gas burned in boilers. The electricity by-product reduces the price of that heat and also reduces the cost of electricity production.
The Select Committee on Energy is investigating why combined heat and power in Britain is lagging behind and why our people are suffering from high energy costs when consumers in other countries benefit from cheaper energy. There is no doubt, according to the evidence, that one of the major factors is the British Gas monopoly.
If proof of that is required I hope that my right hon. and hon. Friends on the Front Bench will refer again to the report of Dr. Walter Marshall to the Department of Energy. I refer to Energy Paper 35 on the prospects and potential for combined heat and power in the United Kingdom. That report said that one of the major reasons why the United Kingdom was bottom of the league for district heating and the co-generation of heat was the monopoly competition of British Gas. It recommended that British Gas be more sensitive to the need to encourage combined heat and power, which would result in energy savings and probably cheaper energy for the consumer, instead of allowing British Gas to continue to develop its market almost exclusively in the domestic area for heat-only burning in boilers.
A number of cases have been brought to my attention of British Gas deliberately trying to frustrate the development of district heating and combined heat and power which could benefit millions of consumers. In the Midlands, Mr. Geoffrey Shepherd has developed with industry a combined heat and power station at Hereford. Bulmers benefit from the heat and electricity is made available to the grid at a lower price than the Midlands electricity board has to pay for electricity from the national grid.
A number of similar schemes for combined heat and power have been proposed but British Gas has refused to quote to supply gas. It decided that it did not want to provide the fuel. That was an arbitrary decision. As a result, several schemes—one of them at Telford new


town—did not go ahead. In its wisdom British Gas decided that it would not provide the gas. It wanted to be excused from quoting. I could give other examples.
It would be reasonable if the people developing the combined heat and power scheme at Telford have somewhere else to go, but they do not. Other schemes are going ahead but they are not using gas.
The scheme at Hereford is already working and supplies Bulmer with heat. The go-ahead has been given for a scheme for Dunlop. That will be partly coal-fired. Gas is ideal for some schemes. Although gas is a premium fuel, burning it in a combined heat and power cycle is more efficient than selling it individually for homes and burning it to provide heat only. British Gas has deliberately tried to prevent that. Its sales effort has concentrated on selling gas selectively to industry and aggressively to the domestic consumer.

Mr. Palmer: Does the hon. Member agree that Conservative Ministers or their civil servants have frustrated combined heat and power schemes, particularly that at Hereford? That was the evidence given to the Select Committee.

Mr. Rost: It is true that in so far as Ministers at the Department of Energy are responsible for national energy strategy they have not taken the action that should have been taken over the years to see that the institutional restraints, such as the monopoly powers of British Gas or of the electricity supply industry, were removed. Some hon. Members—the hon. Member for Bristol, North-East (Mr. Palmer) is one of them, as am I—have argued for some time that this must be done. I hope that the Select Committee's inquiry will prove fruitful in drawing further attention to this matter.
It is crucial that the monopoly powers of British Gas are broken as proposed in the legislation so that alternative sources of North Sea gas can be made available at competitive market prices. Nobody is asking for discounts or subsidies, but at least it should be made available. Industry should have the choice whether to take it. There would probably be more gas available at lower prices than British Gas is prepared to offer to industry in its arbitrary way.
I reiterate that the most important part of the legislation is the competition that it will introduce into the supply and marketing of North Sea gas. I have no doubt that the reserves are much more substantial than is thought because there has not been the incentive to develop. Nor do I have any doubt about the benefits to the British economy, to our standard of living and to the millions suffering from inadequate heating availability. They could have benefited already if we had not mismanaged our energy strategies by failing to deal earlier with the monopoly abuses that the Government are now bravely tackling.
Labour Members should not approach the legislation in the doctrinaire way in which they suggest we are approaching it. It is all very well to get het up about this being denationalisation or massive asset stripping, as has been suggested. No doubt we shall hear this again during the debate. But it was the Labour Government who asset-stripped the BP shares. A huge block was sold, which resulted in control on behalf of the Government being lost. They reduced a majority State holding into a minority holding. Not only that, but they sold the shares at Stock Exchange prices so that there was a huge profit for all the

speculators and capitalists who had put £100 into a few shares. What is even worse, they squandered the proceeds. So let us hear less humbug and hypocrisy about privatisation and selling off State assets. Let us concentrate on the issues of principle. Will this legislation, by introducing more competition, serve the consumer and the national interest better than we have been served in the past?

Mr. Gordon Wilson: I certainly agree with the hon. Member for Derbyshire, South-East (Mr. Rost) that the previous Government got involved in asset stripping but, contrary to his view, it was Scottish assets which were stripped and put into a United Kingdom oil corporation even though it was of a public nature. It is some consolation to me that the new company will have a Scottish registered office; it will be much easier for a Scottish Parliament to take it into public ownership in due course.

Mr. Archie Hamilton: What role does the hon. Gentleman think the Shetland part of these assets play? I gather that Shetland is not so keen on them being thrown in with the Scottish ones.

Mr. Wilson: If the hon. Gentleman cares to go to Shetland he will find considerable opposition to the way in which unemployment is rising sharply now that the construction boom at Sullom Voe is over. I think he will find that opinion has changed.
Certainly in relation to oil assets the British Government of the day decided to take these out of Scottish ownership and that will be put right. Unfortunately, we are not dealing with that but with the Oil and Gas (Enterprise) Bill. It is a somewhat flawed piece of legislation. There are some good things in the safety aspects which will be discussed later in Committee.
I am surprised at the way in which the Conservative Party has gone about its vaunted claim that it is in favour of a property-owning democracy. If it wanted to bring that about it could have taken the radical solution of issuing debenture or other bonds to every citizen, constituting a share either in revenue terms or in capital terms. That would have fitted into its philosophy much better, but it has sought to take a profit-making combine, which has already been given preferential access to oil territory, and sell it off to those who can afford to buy shares but who are unwilling to risk their money in the risky business of exploration and development. That is not the best way to deal with an asset, be it British or Scottish.
It would have been much more rational for the Government to give smaller oil companies an opportunity to compete with the big boys for some of the juicier golden blocks, because it is through the smaller companies that they could have built up the United Kingdom share in the exploitation of oil. In the Brown Book which was published in 1981, although all the companies are British because those were the terms under which they got licences, we see that their parentage is mainly of trans-Atlantic origin—Hamilton Brothers, Esso, Mobil, Amarada; Shell is largely owned by the Dutch and Occidental. If hon. Members go through the list they will find that the United Kingdom equity share is smaller than many people would like.
A possible criticism of the Bill is that it will do nothing to spread the development and exploitation of oil on a


national basis. More likely it will lead to the loss of existing United Kingdom control over the oil if and when some of the shares manage to pass abroad through transactions on the Stock Exchange or whatever.
As the Secretary of State has said, protection may well be built in by virtue of the mysterious articles of association which will give majority voting rights to the Government to prevent a takeover, particularly in relation to appointments to the board. Nobody can argue that the Bill will per se spread the benefits of the oil which has been discovered to anyone other than those who have interests abroad. I should have thought that the Government have made a mistake because some foreign control will still remain.
The hon. Member for Derbyshire, South-East mentioned dogma. I had always thought that the Conservative Party was a believer in the mixed economy. The companies that are active in exploration and development in the oil industry are almost entirely in the private sector. The only company now involved in the public sector is BNOC, although the British Gas Corporation still has rights to explore and develop. I am not sure of the statutory position of the National Coal Board but I suspect its powers for exploration for oil and gas have been stripped away; certainly they are not used. So BNOC is the only public sector element in the industry, unless one argues that British Petroleum serves a role. That might have been a stronger argument if there had still been Government control over BP, but BP is now largely operated as a private company and is regarded by everybody as being within the private sector.
The argument then arises as to why it is necessary to take this action in relation to BNOC, which is one part of the mixed economy. In 1975, when the Petroleum and Submarine Pipe-lines Bill was before the House, examples were produced of State oil companies, publicly controlled oil companies, operating in such diverse countries as Finland, France, Austria, Italy, Spain, Germany, Ireland and the Netherlands, not to mention the Middle Eastern countries and those across the Atlantic. It was argued that there was a protection in having a State oil company to look after the national interest.
What were the benefits? The first would be the audit of expenditure if BNOC was a silent partner—that is, if the operating rights were held by other companies—to see that the tax loss expenditure was minimised, or that the number and location of platforms were so arranged as to maximise oil production, when the inclination of companies under certain configurations in oilfields might be to go for the least capital-intensive scheme to maximise the return of profit.
The second benefit was the monitoring of purchases of equipment. In the earlier days of oil exploration and development it was patently clear that a large proportion of the purchases was from abroad, particularly from the United States of America. It took time for the United Kingdom component in purchasing to rise. The work of BNOC in that direction was a very useful addition to the role performed by the Offshore Supplies Office.
Even though the component of United Kingdom supplies has risen, there is still doubt in my mind, as there always has been, about the accuracy of the figures when it comes to subcontracts, because what could have been placed in the main contract through a United Kingdom

supplier could filter down and go outside the country. Therefore, BNOC, being involved in the investment decisions as an operator or as a silent partner in some of the consortiums, would be there to argue the case for the purchase of Scottish, English, Welsh or Northern Irish equipment wherever possible.
The third benefit was competition with the majors and an assurance of supply, which in a way was a strategic interest. That was largely taken care of through the participation arrangements, but as the oil fields in the North Sea move from their present stage into a more mature one, return territory may become available—territory which is given up—and there may be a role for a State oil corporation in developing those areas that may not have been attractive at first volley to some of the major oil companies. That is a role that it would be much more unlikely for Britoil to carry out, if its main responsibility were to shareholders and not to the public interest.
If it is necessary in the Government's eyes, whether through dogma or desirability, to put the shares of Britoil on the market—accepting the cautionary words of the Secretary of State—is now the time to rush these proposals through the House? The Government may find themselves running out of time if they do not enforce these provisions fairly quickly.
Will the Treasury stand by and allow the market to improve if it wants to curtail the borrowing requirement? I should think not. The Treasury might well like to get in large quantities of money from the sale of the assets, even if it might obtain a better price if it waited two or three years, as I think would be the case.
The International Energy Agency figures show that petroleum products supplies dropped in the past year by 5 per cent. to 7 per cent. The Petroleum Economist gives a drop of 6½ per cent. There have been significant drops in the supply of crude oil from the OPEC countries, even though there has been a considerable top-up from Mexico, the North Sea and India. It was reported in the Petroleum Times of 15 January that there had been a drop in United Kingdom demand, which is now at its lowest for many years. Between 1980 and 1981 there was a drop of 9·3 per cent. in demand for petroleum products.
Oil shares are standing at historically very low levels. There has recently been an improvement in those of Shell, but largely through an improvement in the downstream sector, in petrochemicals and refining, and not necessarily its handling of crude oil.
Britoil will be going into the market as a supplier of crude oil. It will have the attraction of having some good investments in that direction, but the market is soft. I should not be surprised if, were an offer to be made in the next year or year and a half, those market conditions prevailed, and the price achieved was well under the asking price.
I do not. think it right and proper in such circumstances that the House should be asked to consent to a scheme which would seem to be financially problematical, one that could cause the loss of an asset. Therefore, I counsel the Government that the best thing would be to put the whole matter in cold storage. I cannot foresee any real improvement in the next year or two.
I should like to ask the Government one question about Britoil. If it is established on the basis that is intended, will it, like BNOC, be given a favourable disposition or


preference in future licensing rounds? If it is not, the price of its shares may be less substantial than it would otherwise be.
Promises have been made that the jobs in Glasgow will be maintained. I am glad that those assurances have been given, but they are good only so long as the Government have control of the company. The Bill says that there will be an increase in the number of jobs in the Department of Energy. The explanatory and financial memorandum says that the administration of certain clauses could require a total of eight to ten staff in the Department, with an increase to 40 or 50 in due course. Any benefit is certainly not coming to Glasgow or Scotland as a whole.
I turn to the argument about the disposal of BNOC and the head office. For me, the headquarters have always been Stornoway House in London, where the main control was exercised. Glasgow, although staffed with many people performing very useful jobs, has not had complete control over policy, except when the directors travelled up from London to take over.
I should like to say a brief word about gas. British Gas has been no great respecter of the interests of Scotland. It was set up only when gas was discovered in Scottish waters and the then Scottish Gas Board was abolished. In Scotland we found that the gas from southern waters came up slowly, with the grid. I can understand why. It was a matter of development and of tapping the grid as it came up, but there is no doubt that it took many years for natural gas to reach Scotland.
One of the significant effects is that in the industrial sector Scotland received only half the share of gas to which it would be entitled proportionately, despite the huge production that is now beginning to come from Scotland, both from the Norwegian suppliers in Frigg and from the Forties.

Mr. Eggar: Is it not also true that Scottish industry benefits considerably from electricity that is much cheaper than that available in the rest of the United Kingdom?

Mr. Wilson: The hon. Gentleman touches on a difficult and dangerous point. I counsel him to come into our debate on Thursday about what has happened to the Invergordon smelter. He will then be treated to a number of hours of critical examination of electricity prices in Scotland. I can give the hon. Gentleman one example, which bears some relation to another provided by the hon. Member for Derbyshire, South-East. There is an industrial estate in Aberdeenshire which, although it is very close to St. Fergus, where the gas is landed, was refused access to gas by the British Gas Corporation on the grounds of expense. As a result, that estate had difficulty in development. Obviously, the proximity to gas supplies does not automatically mean preference in supply. That disparity inclines me against the British Gas Corporation.
According to the Petroleum Times, AMOCO is supposed to have two or three projects that it would like to push forward and it would be looking for a price of between 26p and 35p per therm. That is a wide gap between the minimum and maximum limits. According to the report, the BGC is currently paying 16p or 17p per therm and those developments have not been going ahead. Therefore, if one argues in favour of additional supplies of gas, the price of gas might rocket. The advantage would be more gas, but the consumer would have to pay a considerable amount. As I understood the Secretary of

State, we are mainly dealing with industrial consumers. The domestic side of the industry will remain with the BGC. Many industries and large gas consumers argue that they are already paying more than their business competitors on the Continent. Therefore, there are difficulties. I am worried that the break-up of the monopoly could lead to considerable gas price inflation.
The Government made a better start than their predecessors, when they substantially increased oil taxes and the restrictions on flaring. I have already commended the Minister on his actions. However, in the past year, the Government's energy policies have virtually collapsed. The gas-gathering pipeline has gone and has left a substantial gap in Scotland. There was a bungled deal with Norway over the price of gas and there was the loss of Norwegian gas. The Norwegians have their own system, which will come into operation in 1986. The cost of energy to industry has affected Corpach and Invergordon. There is an absence of work on the depletion strategy. Indeed, the Labour Party's restrictions were quite injudicious and the Government have still done nothing about that. In addition, this Bill has been introduced. Therefore, although the Government started well, they are certainty making—to use a good Scots word—a bourack of the whole affair. I shall certainly vote against the Bill, because of the dangers that it involves and because, ultimately, the provisions relating to the sale of BNOC will lead to a loss rather than a gain.

Mr. Michael Morris: Most Opposition Members have said that, with the exception of part IV, the Bill is based on dogma. When I sat down last night to prepare some comments, I was moved by a letter that I had received from a constituent, Mr. Elliott of Trubend Ltd. I shall quote from that letter. He referred co the plight facing his company and said:
Apart from the lack of orders my greatest problem has been with rising costs that are out of my control. No matter how disciplined we become, the public sector costs could not be contained. The electric, gas, coal, telephone, post, rail (goods deliveries), fuel, local authority charges, rents, rates and especially water, which will soon be as expensive as fuel, continue to rise incessantly.
It is against that background that we must view the generic side of the Bill, in addition to the specific proposals as they affect BNOC and the BGC.
On the generic side, I have the utmost sympathy with my right hon. Friend the Secretary of State. Last week, the chairman of British Telecom said that the company had not only failed to hit its target of a 5 per cent. increase in productivity, but had fallen back 5 per cent. He said that his prices had gone up twice as fast as the national rise in prices. That was achieved solely by increasing the price to the consumer.
As someone new to the industry, it seems to me no different from the rest of the public sector. It faces the same tragic position. Much of it is run for the benefit and convenience of those who work in it. Far too little is run for the benefit of the customer, the final consumer or the taxpayer. My right hon. Friend the Secretary of State is doing the nation a great service by introducing such a Bill.
I came fresh to the industry, and the first aspect that I considered was an assertion that seemed illogical and that has been repeated by, among others, the hon. Member for Dundee, East (Mr. Wilson) and the right hon. Member for Leeds, South (Mr. Rees). They assert that if the pipelines


are made available to outside producers and gas production is increased, the automatic response will be an increased price to the final consumer. There is no economic fact to suggest that that has to happen. However, it could happen. I suggest that it depends upon which of the four elements becomes the dominate one. Is the dominant element to be the livelihood and future prosperity of gas producers, of the BGC, of the final consumer—whether industrial or domestic—or of the Government, in the form of the Treasury?
There seems to be some debate about whether producers will get a higher price or, indeed, need one. However, let us assume that they receive a higher price for the gas than they are offered at present. A higher price for the gas from the fields does not necessarily mean that there will ultimately be a higher price. Two elements will have a bearing. I refer first to the monopoly costs of the BGC and, secondly, to the monopoly profits. The Government could have some effect in those two areas and we, as parliamentarians, should do some hard questioning there.
Let us consider the Treasury's influence. It specifies financial targets and cash limits, and, more recently, there has been the gas levy. That is one area of variability that can affect the price to the consumer. However, another area is much more interesting. Let us consider the London Electricity Board's recent report and the fact that its showrooms have achieved a £5 million loss. Who can achieve that on retailing domestic appliances? It is no mean achievement. Therefore, monopoly profits and the inefficiency of the nationalised sector are significant.
The point of the Bill, and of the dogma and drive from this side of the House to achieve competition, is to remove public sector monopoly inefficiencies. Some progress will be made. However, that is not the complete answer. It will take us a long way. All the evidence from the public sector that I have considered as a member of the Public Accounts Committee shows, without exception, that there is vast potential for saving money.
In his opening speech, the right hon. Member for Leeds, South mentioned pricing policy. My hon. Friend the Member for Bedford (Mr. Skeet) mentioned that and said that there must be some published price or tariff for the distribution pipeline. However, we must go further than that. There must be a monitoring of operating efficiency. Monitoring of public sector efficiency combined with the other two areas means that we should discover whether the net result to the consumer would be higher prices. I believe that they will not arise, and that more gas will be supplied to British industry at a competitive rather than a higher price.
It is a pity that the hon. Member for Dundee, East (Mr. Wilson) has left the Chamber because I shall comment on his statement that the most opportune time to lodge stock would be in the latter half of the financial year. In the sale of any public asset there are many times when it is most opportune to obtain the highest price for it. That is not the sole question to be asked. The issue must be considered in the context of the Government's requirements for revenue and of whether it is most cost efficient to sell stock in the autumn or early winter or, alternatively, to raise money from other areas.
It must be the right of any Government—it is logical and reasonable—to liquidate public assets when they believe it to be necessary. My hon. Friend the Member for

Derbyshire, South-East (Mr. Rost) commented that a previous Government liquidated a section of British Petroleum.
The Bill has additional benefits. A primary benefit will accrue to new industrialists in my constituency and elsewhere in the heartland of the Midlands, who are now unable to obtain new gas contracts. I very much hope that as a result of the Bill the combination of increased gas supplies and competition will at least mean that those industrialists wanting gas supplies can get them.
The right hon. Member for Leeds, South (Mr. Rees) talked about great difficulties with the transmission, control and monitoring of gas. They do not seem to me likely to arise. I worked in Canada for two years. There was no great difficulty there for the private sector in working many of those areas and deciding how to monitor one against the other. I do not see any horrendous problems in that area.
I hope that my right hon. Friend the Secretary of State for Energy will give us some reassurance on the worries of the farming community about whether any special powers will be given to the private sector for the laying down of pipelines across farming land. I assume that no extra powers will be given, but it would be helpful to have an assurance about that.
The second key area that I shall probe is public accountability. I listened carefully to the right hon. Member of Leeds, South. It will be helpful to those hon. Members who will serve on the Committee—as I hope to—if the right hon. Member differentiates between what might be called "the party political area" of deciding whether negative resolutions are appropriate to all areas of the Bill and those areas where it is right that there should be parliamentary accountability. I agree with the right hon. Gentleman and with other hon. Members that too often in Bills—this applied when I sat on the Committee considering the Community Land Bill—accountability is non-existent. It is important that hon. Members ensure, not on policy areas, because it is the right of the Secretary of State of any Government to dictate what the policy shall be, but where public money is involved that there are proper procedures for accountability. Instead of taking a very broad brush to that, I hope that he will consider the matter logically and that he might in certain areas make some sympathetic response.
The Bill offers a golden opportunity to make properly accountable this part of the public sector—it will still remain a 45 to 49 per cent. shareholding. I hope that we take the opportunity of the Bill to lay down what should be the rightful area of parliamentary responsibility into the future and not just in Committee.
In four or five years' time, hon. Members will want to analyse what has happened to Britoil. We must give time for such an analysis. At some time—probably towards the end of the next Parliament—it is right that hon. Members should seek and obtain, through some independent body, an assessment of what Britoil has achieved and is achieving. Arising from that point, hon. Members should have the right to question the results and decide accordingly. There should be deep questioning into those two areas of the Bill. The Bill is essentially about the public sector and, by taking the boldest and largest decision about denationalisation, the Secretary of State for Energy is paving the way.
I hope that Parliament, the Secretary of State for Energy and other Front Bench Members are clear that we see this


as paving the way and that we expect others to follow. We owe the Secretary of State, as does the nation, real thanks for establishing a blueprint for this area. If that is dogma, I am prepared to accept it as such.

Mr. Deputy Speaker (Mr. Ernest Armstrong): It might help the House if I remind hon. Members that there are eight hon. Members trying to catch my eye, and that there are just 80 minutes before the Front Benches hope to do so.

Mr. Dick Douglas: I shall try to be brief because much of my criticism of the Bill was contained in my remarks on 10 November 1980. However, I have no objection to an intervention in terms of policy by the Secretary of State for Energy in the energy provision overall. Therefore, in strict dogmatic theory, following the hon. Member for Northampton, South (Mr. Morris), when he said that we should have an answer to dogma, I do not object to the Secretary of State taking on himself certain powers. However, if we consider how he might use those powers, Parliament has a right to question the exact nature of the orders, particularly when it comes to the view that we should accept a mere allocation of time under the negative procedure.
The Secretary of State disgracefully omitted from his speech the fact that we have the Burgoyne report on offshore safety and the whole basis of the argument behind that. During the period that Burgoyne and his colleagues were investigating, the "Alexander L. Keilland" incident occurred and. recently, there have been other incidents in the North Sea. Those incidents question certain aspects of the use of semi-submersibles. [Interruption.] I hope that I have the Secretary of State's attention. They are being used, not in the drilling mode, but in accommodation or other modes, for example, production platforms.
My right hon. Friend the Member for Leeds, South (Mr. Rees) was right when he spoke about part IV. Technical arguments should apply and political dogma should not intervene. The technical arguments require detailed investigation and detailed information. Will the Secretary of State make available, through his discussions with the Norwegians, their detailed report on what happened to the "Alexander L. Keilland" and the consequences for other rigs, especially semi-submersibles, that are being used in the United Kingdom sector of the continental shelf?
The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) was wrong when he talked about the relationship between the safety zones and the sector clubs that have been agreed between the Government and United Kingdom offshore operators. The right hon. Gentleman said that certain emergency support vessels would be made available. A fine vessel is being built by Scott Lithgow—I declare an interest—for BP. There is the "Occidental Thoras". There is the Shell vessel that is being built in Finland, the building of which has been severely delayed. Theoretically there are some deficiencies in that type of cover.
I have some interest in diving. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who has great knowledge of the subject, has promoted with others a charter on trade union activities in North Sea operations. I have received somewhat confidential

information from some of my constituents that many of the young people, especially from the United States, who are taking part in North Sea diving, are insufficiently trained.
I have corresponded with the Home Office and the Department of Employment and it seems that it is difficult adequately to control these activities by the use of work permits and the implementation of international legislation. However, we should receive assurances from the Department of Energy, bearing in mind its relationship with the Health and Safety Executive, that it is pursuing these matters with a view to ensuring that those who undertake diving and other activities in the North Sea are sufficiently trained and certificated. That was one of the recommendations in the Burgoyne report. In his great sweep of these areas the Secretary of State omitted any reference to these important ingredients.
We get oil from the North Sea and it is obtained in hazardous conditions. Men risk their lives—very few women are employed in North Sea activities because of the nature of the employment and the restrictions imposed by employment legislation—to extract the oil, and it will do the Secretary of State no good to sit in the comfort of the House and almost completely ignore them. It will do him no good if he visits the rigs and talks about health and safety with those who work on them when he ignores them while speaking on the Floor of the House.
I turn to the parts of the Bill that refer to BNOC and British Gas. First, we are not clear about the nature of the articles of association. It is all very well for the right hon. Member for Greenock and Port Glasgow to emphasise that Britoil will be registered in Scotland. It is made clear in BNOC's annual report that 18 associated companies are registered by the corporation and that 12 of them are registered in England and only six in Scotland. If a company is registered in Scotland, that does not mean that contracts will be subject to Scottish law. They will be subject to interpretation under any law that the parties to the contracts choose to apply. The fact that Britoil will be registered in Scotland is a mere sop.
The people of Scotland were and are concerned about the benefits from North Sea oil and gas that will flow to the people of the United Kingdom as a whole. The last Labour Government—unhappily the hon. Member for Dundee, East (Mr. Wilson) is not in his place—confirmed some of the fears that the Scots had that the assets would be misused by the multinational oil companies. The Labour Government created BNOC under the Petroleum and Submarine Pipe-lines Act 1975. That measure is being destroyed for doctrinaire reasons. If BNOC has such a small share of the oil reserves in the North Sea—it is said that it is about 7 per cent—what is all the fuss about?
If the Secretary of State says "To safeguard the national interest, I shall doctor the articles of association so that whenever there looks like being trouble I or my successors can intervene, even though we might have only 10 per cent. of the shares", he will be able to claim that he has a duty to protect the national interest because of his responsibilities that are set out in the articles of association.
What will that mean in market terms? Conservative Members are much more conversant with them than I am. The valuation of the shares will be diminished because those who buy shares will not be completely free. The shares will be rather like class A shares. I understand that the television companies are having some difficulties for similar reasons. The market will not value shares in


intrinsic terms in the same way as the nation. Therefore, we have an obligation to ensure that the national interest is protected by ensuring that the nation has control over these assets and can obtain information on the profitability of the exploitation of the resources. Protection does not lie in merely doctoring the articles of association. I canvassed this argument on 10 November and I shall not take it any further. I merely say that the Secretary of State is denying himself a source of valuable information. He denies it to himself and to the nation on nothing else than doctrinaire grounds.
Much criticism has been levelled at the British Gas Corporation because it has monopolistic powers vis-a-vis the oil companies. The corporation carries out explorations and produces gas on its own. It has more than a shrewd idea of the production costs of that gas. The hon. Member for Derbyshire, South-East (Mr. Rost) has argued that there is a great deal of gas available in the North Sea. At what depth is that gas and what will be the production costs? I suspect that he is partially right in his contention. If he has knowledge of where the reserves are, is he saying that the Brown Book's estimate of the reserves is completely wrong? Is he claiming that he has deep seismic information? In the southern sector of the southern gas basin we are talking about drilling at 6,000 ft. In the other pockets of gas it will be necessary to go down to 11,000 ft. or 12,000 ft. That will make the operations more costly.
Paragraph 4 of the brief from the Library reads:
When the relaxation of supply legislation was announced last October oil companies mentioned two possible new supply lines, to Teeside and the North-West, which would be privately owned. Such additional provision, laid through heavily developed areas, would hardly be likely to make gas supplies to industry any cheaper than BGC's prices.
If energy prices are to be interrelated, it is hardly feasible to suggest, especially in the Bill, that gas prices will be cheaper. Those who juggle with the argument and suggest that gas prices will be cheaper are misleading the House, gas customers and potential customers.
I now turn to one or two brief technicalities. We are talking about the British Gas Corporation grid, which is a 36-in line—at high pressure—that can be used for methane plus additional ethane. Therefore, the argument of the hon. Member for Derbyshire, South-East about other associated gas does not prevail. The companies always have total use of other associated gas. There is nothing in the BGC's powers to prohibit the use of that gas for petrochemical and other purposes.

Mr. Rost: In associated gases I include methane.

Mr. Douglas: That is a reasonable argument. We are not suggesting that the Brent line was held up because the BGC would not negotiate a methane price and that the propane, butane and ethane was being denied for a long time to the petrochemical facilities coming to my constituency. That argument does not hold water.
An argument was put forward in The Economist about a week ago that one could use the land line for ethane and methane for export to the Continent. It would be attractive to obtain a continental price for gas. That interferes directly with the overall view that the Department of Energy should have for a four-fuel managed economy for the United Kingdom. I asked the Secretary of State about that in my initial remarks.
The North Sea gas-gathering system has been lost. I am sorry that the Minister of State for the Department of Energy is not here. He has lost the gas-gathering system. We shall discuss that on Thursday. He has lost the aluminium smelter. To coin a contemporary advertisement in Scotland, he shall have a terrible job getting "the Ross back in his Cromarties."
We lost that system because the Government failed to take an overall view and to impose their will on the oil companies. I shall not talk about bits and pieces such as the £100 million development that British Petroleum and other companies have announced. I shall not say that that will not take place and that we will not get all the gas eventually. We are looking for an overall structure. It behoves the Secretary of State to impose his will on the oil companies.
In the Bill we see a doctrinaire approach to a complex energy problem. In his wisdom the Secretary of State thinks that the addition of 40 or 50 people to his Department will be all that is required to provide expertise. A rough estimate of the cost to the Department is £¾ million to £1 million. He can obtain similar expertise and a similar outlook by leaving the matter alone. I do not suggest that it is perfect, but I am deeply suspicious of the present Secretary of State as he seems to argue all the time that he will know best about being the arbitrator between the interests of the oil companies and of BNOC.
In a speech on 7 December, when he was talking about the onshore lines, the Secretary of State said:
Similarly, in the case of BGC's onshore pipelines, I envisage that private gas suppliers will negotiate with the Corporation. I have already said that these negotiations must be effective. To ensure that private suppliers can get access to BGC's pipelines on reasonable terms, there will be legislative provision for bringing any dispute to the Government for determination. So when agreement is not possible in normal negotiations, private suppliers will ineffect be able to call on the Government to arbitrate on the points of difference and the Government will have powers to require BGC to make capacity available and to specify the terms.
So much for arm's-length dealing. The Secretary of State is the referee. He is telling the multinational oil companies that if they do not get what they want, they should come to him and he will tell British Gas how to behave. Is that the free market operating?

Mr. Rost: Yes.

Mr. Douglas: My goodness, there are some funny boys in this school. The referee is cooking the books. It is as if Glasgow Rangers were playing Celtic and saying that it would board up the Copland Road end of the pitch and Celtic could shoot that way.
That was a shocking admission by a Secretary of State for Energy. It makes us distrustful. The Secretary of State comes from the Treasury with a Treasury view. He knows that something must be done about taxation. If he makes a concession, what concessions will the Governmen make on the tax? That is part of a total package. It will have enormous political repercussions, particularly in Scotland. The Scots have suffered no more than other parts of the United Kingdom, such as the North-East and Wales. The argument was put forward that the smelter failed because it was not in the right geographical situation. However, much of the oil has been found off the shores of Scotland. Therefore, the Scots have a right to see that the benefits accrue to them and not to the multinational oil companies.
For that and other reasons, I wholeheartedly support my colleagues in opposing the Bill.

Mr. Peter Viggers: It is a pleasure to follow the hon. Member for Dunfermline (Mr. Douglas) whose contributions are always knowledgeable and considered. I share his concern about safety in the North Sea. Bearing in mind the scope of industrial development there, the accidents and deaths have been comparatively few. However, that is not a fair argument. One injury or death is too many. The terrible tragedy of the "Alexander L. Keilland" shows how near we are to the frontiers of knowledge in the North Sea. I declare interests relating to the oil and gas industry, which predate my time in the House of Commons. If I am tainted by a little knowledge of the industry, I plead guilty.
On my interests in conservation of oil and gas I claim to yield to no one. It is vital that we should properly use the hydrocarbon reserves that are given to us. The casual terms that are often used about spending the oil revenues are totally misleading—almost as misleading as Voltaire's comment on the Holy Roman Empire as being neither holy, Roman nor an empire. Not just oil revenues are concerned, but both oil and gas. It is not revenues, but capital.
The oil and gas in the North Sea are minerals. By depleting those minerals we are depleting a capital asset as completely as if we were dumping good agricultural land back into the North Sea. The assets should be regarded as capital assets and we should draw a prudent line between the use of capital reserves, which we are depleting by using the oil and gas reserves, and the use of revenues.
It is important that we should draw that line. The oil and gas reserves have taken millions of years to be built up. It would be wrong and history would never forgive us if we used those resources too quickly. Future generations would not forgive us.
I am not at all averse to the concept of a separate fund for the spending of oil and gas revenues. There is a great deal to be said in cosmetic presentational terms for showing the public that the funds available from oil and gas have been used and invested prudently for future generations and have not simply become part of the Treasury's expenditure. I know that this flies clean contrary to the virtue of Treasury thinking, which is that hypothecation is quite wrong—that being the term used to describe funds being spent on the source whence they came. The public are entitled to see where the North Sea money has gone. At the moment they cannot see that it is being used prudently. The present Government, like the Labour Government, are simply including the revenues as if they were part of Government income.
What should our depletion policy be and how can the public best benefit from development?

Mr. Rowlands: I was following the hon. Gentleman's first point closely and with some sympathy. Unfortunately, immediately after this debate, the House will be asked to pass a money resolution which, as far as I understand it, will prevent us from debating those issues and will bind the House to put all the money from the assets into the Consolidated Fund or the National Loans Fund.

Mr. Viggers: I am fully aware of the hon. Gentleman's point. It is a fair point for him to make to me. I am urging a view which I consistently urged on the Labour

Government, and which I continue to hold. I do not think that a massive change in the way that the money is spent is necessary, because the present Government, like the previous one, are spending thousands of millions of pounds investing in the public sector and elsewhere.
I am anxious that a presentational point should be made so that the public can see that as capital assets are being depreciated the money from those assets is being reinvested in capital projects. The point is presentational rather than one of major substance.
It is my personal and subjective judgment that the depletion rate should be aimed roughly at the level of national net self-sufficiency. there is nothing sacred about that figure, but it is difficult to argue that we should deplete faster than is necessary for national net self-sufficiency because if we do that, we shall run down our resources at a rate which would cause us to see the end of our reserves at the end of the century, give or take a few years.
Who should be responsible for depletion? Who should be responsible for producing oil and gas? I totally agree, with the Secretary of State that the business of Government is not the government of business. Indeed, I believe that the Government are uniquely unsuited to adjusting themselves to the risk element of the oil and gas industries. Moreover, the Government do not need to be in that position since they have, and will continue to have, a wide range of controls over the gas and oil industries. They have controls over tax, depletion, allocation of licences, and controls through their trading business and participation agreements. There is no need, therefore, for the Government to continue to be in the commodity business and owning the oil itself.
Of course, there is a risk of politicisation of the oil and gas industries. I have heard Opposition Members call for BNOC to spend more money exploring for oil in different sectors of the North Sea adjacent, perhaps, to the constituencies that they represent, as if by those calls on the Secretary of State they can cause the oil and gas reserves to be created. The Government are not suited to being in the major business of oil and gas exploration. I strongly support the view that we should now devolve and introduce private capital into this sector.
Part II of the Bill is extremely important. It chips away at the monopoly of the British Gas Corporation. The gas corporation thinks that it has done well in producing gas from the North Sea, and I do not disagree. It has indeed done well. In exactly the same way, the BBC, when it had the sole franchise for television, no doubt believed that it was doing well, but it has improved beyond all recognition since it has been subject to competition from the independent television companies. With all respect to the talents of those involved, the gas corporation's success in the North Sea was not much more difficult than running a successful party in a brewery. It had access to massive funds in money and in oil and gas from the North Sea and it has of course done well, but I still believe that it will do better when it is subject to competition.
The BGC's monopoly of purchase and supply has undoubtedly grossly distorted the pattern of development of North Sea oil and gas. That point has been made by my hon. Friends, notably my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), so I shall not repeat it.
The right hon. Member for Leeds, South (Mr. Rees) expressed concern about safety if other enterprises were


allowed access to transmission systems. Here I repeat the point that I made in an intervention in his speech. There is no reason why the safety standards which apply successfully in other countries where many companies are involved in the transmission of oil and gas should not be equally successful here. I therefore do not share his apprehension, which is based apparently on discussions with trade union leaders.
The significance of the Bill is perhaps not so great as it has been described in some quarters. The hon. Member for Merthyr Tydfil (Mr. Rowlands), who will be winding up for the Opposition, used terms such as "wholly invidious", "weakened and vulnerable", "sweeping", "grubbier" and "unfettered", to draw just a few adjectives from his article in The Observer last Sunday. As its main thrust, the Bill will result in about 8 per cent. of North Sea oil becoming available for private investment. That is a smaller percentage than the 9 per cent. which the Labour Government themselves passed to private hands when they needed the money because they were under attack from the International Monetary Fund, so in that sense the Bill is not so important as it has been billed to be.
Nevertheless, the Bill is important. It will promote efficiency and competition, and I support it wholeheartedly.

Mr. David Penhaligon: We have before us an important piece of legislation and the debate has gone as might have been predicted. To be fair, there has been slightly less of the usual swopping of dogma on the issue than I had expected. Nevertheless, I think that we would all admit that one's party's attitudes and one's basic view of life clearly influence one's appreciation or otherwise of the Bill, and one's views regarding monopolies deserve to be spelt out in the debate as that is the subject that we are discussing.
I take the view that monopolies by definition exploit their position—sometimes with real malice, sometimes by accident, but mostly just because they are monopolies. For that reason, I do not entirely dismiss the Government's proposals for the British Gas Corporation. In principle—I use that word with care—I see nothing desperately wrong with the proposal that it may be possible so to organise things that others may have access to the national grid apart from the British Gas Corporation monopoly. Even without claiming any expertise in this, I can envisage some not insignificant problems as to how that will be done in practice even if I am prepared to examine it in principle.
There is the problem of how one allocates historic costs and also the effect upon the British Gas Corporation and its ability to satisfy peak domestic demand if other people are pushing their own gas through the same pipeline. Anyone living in a part of the country that has been affected by electricity cuts will know that Governments must be extremely careful to ensure that domestic supplies do not fail during a period of great stress such as most hon. Members have known recently in their areas. I live in a part of the country that has had no snow, but those hon. Members who have will know of the stress caused by cuts in domestic heating supplies. In some circumstances it can be fatal, but in any circumstances it would be something any Government would wish to avoid.
I have some sympathy with the proposal, but given the better definition that may be discovered in Committee of how the Government hope to overcome the difficulties, I would not like to predict whether there may be some support from the Liberal Party for the Government.
The problems cannot be covered up by simply saying that the Secretary of State will sort it out. I do not have much faith in the Secretary of State. I have no doubt that he is one of the country's great technologists, who understands the problems of passing gas down pipes and so on, but Conservative Members can argue that with more conviction than I can. If the proposals can be achieved there may be some advantage to United Kingdom manufacturers, and anything that can do that must be welcomed by us all if we wish to see a growth in our GNP and an increase in our living standards.
is a part of the Bill with which I have some sympathy, but I have very little sympathy with the proposals relating to BNOC. The newspapers claim that the sale of BNOC will produce £1 billion. That is a great deal of money, but it will build only one of the nuclear power stations which I know the Minister is so much in favour of—[Horn. MEMBERS: "Only a half."] That was my view, but I was trying not to get involved in nuclear power, something in which I tend to get involved.
One billion pounds is still a great deal of money though it will not put the British economy right at one stroke. One has the impression that the main attraction for the Government of selling BNOC is the money and the one-year effect that the sale will have on the PSBR, because there have been few other strong arguments.
The argument of monopoly does not apply in the case of BNOC. Nobody is suggesting that BNOC is of sufficient significance to affect international competition in the production of oil. I am somewhat cynical about how much competition there is in the production of oil today, given that the price of the product is not based on manufacturing cost but appears to be based on the decision of the OPEC committee. Therefore, the sale of BNOC will have no significant effect on competition in general, and because that business can be judged only in comparison with others—and there are others—I do not see any great advantage to that trading company in selling it off.

Mr. Archie Hamilton: If the policy of the Liberal Party is not to denationalise BNOC, is it then to nationalise further into the oil industry?

Mr. Penhaligon: Certainly not. I have never become worked up about arguments on nationalisation and denationalisation. If the Government look up the records of this Parliament they will find that they have received much support from the Liberal Party for various denationalisation schemes. I can think of one that I did not support, but if I mention that we shall be back to the argument of a moment ago. In some circumstances, I could be convinced into supporting the denationalisation of BNOC. I just do not see how that fits in to any real ore necessary criteria.
The real reason I am against denationalisation is that I regard BNOC as peculiar and unique in that it holds a percentage of one of our great national resources. By implication, a great national resource is something that from time to time the nation will wish to use so that it can derive the benefit. The argument is not so much whether the oil owned by BNOC should be used to the national


advantage. Clearly, if we can raise £1 billion by selling it, that money could be used to the national advantage. Equally, if the company is allowed to trade profitably, its profits could be used to the national advantage.
The real decision for the House is whether it sees any great advantage in using that national resource immediately. We should remember that it is only a percentage of North Sea oil and it is not a monopoly of North Sea oil. We must consider whether it should not be used later for the general good of the country while at the same time having a trading company in the North Sea oil market which can glean some information about what is going on in that important sector of our economy.
I come to the conclusion that I am against the denationalisation of BNOC. I confess that if the Government's plan goes through and it is denationalised, we are dealing with a new situation. I do not for a moment suggest that votes will be forthcoming from the Liberal Bench to renationalise BNOC after the next election—[HON. MEMBERS: "Ah."] I see nothing illogical about that. At present BNOC is nationalised. I am talking about changing that situation, and I see no advantage in doing so. If in five years' time, when BNOC is denationalised and someone proposes to renationalise it, we shall have to make a judgment on that basis. I therefore see no reason to give a carte blanche guarantee that the parliamentary Liberal Party will use its votes in that direction.
It is not difficult for the Government to raise money against North Sea oil, if that is what they wish to do. They could issue bonds against the value of that oil. If the bonds were sold at $33 each, which is the approximate price of a barrel of oil, and the Government promised to redeem those bonds at whatever was the going price for North Sea oil at the time of cashing in, I have no doubt that a large number of people would be attracted by such an investment. Of course, if the value of North Sea oil decreased, they would lose money, but I suspect that a large number of people would be interested in such an investment. I also suspect that that would raise the quantity of money about which we are talking without losing control of the company, as the Government partially wish to do.
Clauses 20 to 27 deal with safety. The right hon. Member for Leeds, South (Mr. Rees) raised a valid point which had not occurred to me before the debate started. Given that it sounded credible, I should like to give it some weight.
These clauses, though important, appear late in the Bill. I am fearful of the filibuster that the Bill will undoubtedly cause in Committee. That could lead to these important clauses being guillotined. I do not see how anyone in his right mind could believe that clauses 20 to 27 should be guillotined. It would be a great tragedy if that were the net result. I see no real problem with the suggestion to take those clauses out of the Bill so that they find their way through the other processes of the House. After all, we do not have a desperately hard legislative programme in front of us.
By adopting that suggestion, we could say with some confidence that the clauses were not dealt with by a tired Committee at the end of a filibuster when great pressure was on it, but that a Committee of the whole House had given the clauses full and total thought. No one outside the House will thank us if we do otherwise.
My party will vote against the Bill tonight. I confess that it is not as bad as I had expected and, in his opening

remarks, the Secretary of State made one or two comments that led me to believe that it may not be as bad as I had feared. No logical reason has been given to the House today for selling BNOC.
The main argument will not take place in the House. It will take place in the country. Those concerned with industry will decide whether the Government are right to sell BNOC to those who can afford to buy the shares in it. If the Government had put forward a wider scheme in which everyone could have an active participation in this great asset that luck has given us in the North Sea, we could see some sense in it. They are not doing that. They are selling off a great national resource without having given any logical reason. There will be no support from this Bench for the Bill.

Mr. Tim Eggar: The House is always grateful to the hon. Member for Truro (Mr. Penhaligon) for the light relief that he brings to our debates and for his and his party's ability to see all sides of all arguments at all times. [Interruption.] I do not wish to engage badinage with the hon. Gentleman's colleagues who seem to be merely compounding his errors rather than adding clarification to his policies.
In many ways this debate has been a re-run of the debate on 10 November. I have desperately been trying to look for similarities and dissimilarities. There is one clear similarity. It is becoming ever more difficult to differentiate between the energy policy of the SDP and that of the official Opposition. I cannot quite make up my mind whether the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) is advising the right hon. Member for Leeds, South (Mr. Rees), or whether the two right hon. Gentlemen share the same research adviser who is peculiarly devoid of arguments. I understand now. The right hon. Member for Greenock and Port Glasgow takes the advice of the research assistant of the right hon. Member for Leeds, South.
It is remarkable that we have with us the hon. Member for Merthyr Tydfil (Mr. Rowlands), and we are extremely grateful for that. I was wondering how I could describe him. Could he be described as the victor of Bishop's Stortford or, alternatively, the symbol of another false dawn for Labour Party reunification? We are to be spared the spectre of the horrified face of the right hon. Member for Leeds, South as he listens to the pearls of wisdom that flow from the right hon. Member for Bristol, South-East (Mr. Benn), so we shall be noting with interest tilt expression on the right hon. Gentleman's face as he listens to the comments of his hon. Friend the Member for Merthyr Tydfil tonight.
The wait for this Bill has been well worth while. The Bill is long overdue. It tackles two basic problems that have bedevilled this country's energy policy. The first has been the stifling effect that State ownership has had on the conduct of BNOC's affairs. It was most vividly illustrated by the decision that BNOC was forced to take, I believe under Treasury pressure, not to go ahead with the development of the Clyde field. That was a development that made economic sense in all ways except from the point of view of the PSBR. That is an illustration of the sort of freedom that BNOC will be given once it is out of State ownership.
The other great achievement, as my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) and others


have said, is the decision to break once and for all the monopoly and monopsony power of the British Gas Corporation. I do not wish to dwell on the severe damage that that monopoly has done to this country over a period of time. The importance of the measure in the Bill to break that monopoly cannot be over-estimated.
Another factor bears repetition. There is nothing in the Bill that reduces in any way the Government's and the country's ability to control the exploration, development and production of hydrocarbons, both offshore and onshore. To argue otherwise is to have no regard for the facts and clearly shows that the person who put forward the argument has not studied the Bill in sufficient detail.
I am sure that my right hon. Friend the Secretary of State will not be in any way surprised when I express regret and disappointment that he was not able to announce this afternoon that he would be selling shares in the British Gas Corporation. I hope that before the end of the Committee stage we shall have a clear statement from my right hon. Friend that it is his ultimate intention to privatise BGC in the same way as he has decided to proceed with the privatisation of BNOC.
The Bill should be seen only as one leg of our new energy policy. The other leg, which is as important, would be the decision to alter the taxation regime in the North Sea, particularly as it affects marginal gas fields and satellite oil fields. I am sure that the House will turn its attention to that matter when the Finance Bill is introduced.
I ask my hon. Friend the Minister of State, Department of Energy to comment on the Government's intention with regard to the showrooms. We know that disposal of them will not proceed during this Session of Parliament. I hope, however, that even at this stage efforts will be made to persuade BGC to allocate costs properly to the showrooms so that we can see whether they are making a profit or a loss.
I am disappointed that we have not yet had a clear statement from the Secretary of State about his policies in regard to the export of gas from the United Kingdom. I am not necessarily talking about exports from British waters. I am also talking about the export of gas from Norwegian waters because there will be considerable economic advantages to this country of using high pressure mains throughout the United Kingdom, taking gas from Norwegian waters through to the Continent. We need a clear statement from the Secretary of State that, in the long term and under strictly controlled conditions, he will be prepared to give permission for the export of gas. Only in that way can we get real competition and demand for the significant supplies of gas that will be necessary to have an effect on industrial gas prices in this country.
Despite those two reservations, I have no hesitation in commending the Bill to the House. I am sure that it will be seen as a major step forward in providing a sensible and useful energy policy.

Mr. Lawrence Cunliffe: I shall speak rapidly in order to let other hon. Members take part in the debate.
First, I wish to deal with the point made by the hon. Member for Derbyshire, South-East (Mr. Rost). He constantly raises the hardy annual about the flaring of gas in the North Sea. What he says on this problem is more

fiction than fact. It is an indictment against the Government that £1 million worth of gas per day is burnt and wasted away in the North Sea. Yet the Government had their opportunity, when they were asked, by a kind of tripartite axis or agreement about the pipeline only a few months ago, to bring British gas ashore here, to participate, to finance and to give certain assurances to the British Gas Corporation and to a mix of private firms, and to be directly involved in a participation and partnership agreement. The Government turned their back completely on that offer.
Three thousand jobs could have been created in the British steel industry. At the same time, the Government paid lip service to the idea of creating new jobs and reneged unashamedly when they were challenged and presented with the opportunity to show good faith in respect of the words in their manifesto.

Mr. Rost: rose—

Mr. Cunliffe: The hon. Member spoke for 10 minutes and made two interventions. Other hon. Members wish to speak.
As I have said, the pipeline was to have been financed by a mix of private investors, the British Gas Corporation and the Government. It fell through because the Government refused to give assurances to the private companies. The real reason was not that the Government did not want an involvement and control in that situation. The reason for the Government's withdrawal seems to have been the Treasury's fear of the scheme's impact on the public sector borrowing requirement. That was the Government's motivation. That was their conviction and it remains so. There is no doubt that the Government took a senseless and indifferent attitude.
The decision is incomprehensible in energy terms. It is estimated that in terms of return on investment, the gas pipeline is eight to 12 times more cost effective than the Government's proposed nuclear power programme, which on present plans will cost up to £20 billion over a 10-year period. That is a correct assessment and assimilation of the facts as they have been found to be and as British public opinion believes them to be.
I wish to put the Bill into context as it is seen within the framework of a balanced fuel policy and a pricing system. The Bill militates against a decent pricing system. It seems to me that it will imperil our long-term energy needs up to the end of the present century.
I participated recently in an international seminar on energy. Many of the world's energy experts were present. Regardless of political disposition or scientific opinion or any other form of public opinion expressed there, there was a consensus among some of the world's best scientists and energy forecasters that the energy requirements for the future would be met only by a large degree of State intervention. The experts were convinced that the market mechanism in many respects had failed miserably over the last 20 or 30 years, and they included people from the most advanced industrial nations.
We have a Government who are completely insulating themselves from long-term energy planning and price fixing. There has been an imbalance in energy planning and price fixing. There has been an imbalance in energy pricing under previous Governments for the last 20 years. It was sensible to have a good look.
As a nation, we are getting fairly complacent about our energy. We honestly believe that we shall have endless


sources of energy, simply because of the bonanza in coal and oil that has arisen in the last decade. That is not so. We have large reserves of coal. As the House is aware, I have an interest in oil and gas. Britain is better placed than most countries in Europe to cope with what will remain a difficult energy position in the future.
How long will the benefits last? Our oil and gas resources have a limited life span. It was said at the international conference that by the 1990s—it is a revelation to find this out—the whole oil glut of OPEC countries will be just three weeks' strategic reserves to feed world supplies. In my opinion, it is quite reckless to introduce a Bill of this character unless it is viewed within the perspective of total energy planning for the future.
When it comes to guaranteeing supplies, we have huge reserves of coal, which should be used sensibly and discreetly. We must get oil out of our power stations. It is a policy that many nations are finding prudent. We must alternate as quickly as possible, going for maximum conversion from oil, which is too precious to use, and supplementing it by our coal. The demand for electricity supplies will be satisfied mainly from feeding coal into our power stations during the next 20 to 30 years.
Our boom days are ending. It is time for vision and foresight. We must consider this subject in the overall context of full and comprehensive energy planning. I believe that the Bill will have an adverse effect in that respect. Prices will fluctuate according to supply and demand. It is not a practical proposition to risk energy sources that can be calculated and make them unpredictable. We shall never be certain that our energy supplies are safe for the next 20 or 30 years.
I wish to underline two matters. I am concerned about oil supplies and the depletion that has been mentioned in this debate. What alternative options are open to the United Kingdom's oil strategy in the light of the uncertainty about international developments in the supply and price of world oil? How can British oil wells be protected? They cannot be protected by floating shares internationally. No one can tell me that part of our 3 million unemployed people will queue up and scramble for oil shares. The mighty moguls will move in again. At the end of the day, those who have most will acquire most. That is common logic.
We must protect British oil wells against possible continued deterioration in world oil prices generally and the attempts by other producing countries to corner the market. That technique can be used here to get part of the market, and in my opinion it is obviously necessary to ensure the viability of the British oil industry. Even the oil sheikhs are worried about what is happening in the world energy scenario. It is a distressing scenario, if one is to believe what most experts say about our energy needs to the end of the century.
The last issue that I wish to raise is safety. It has been mentioned in our debate, and it is an important subject. I suggest to the Secretary of State that it is high time that we had a North Sea oil charter. It is high time that we consolidated the existing legislation. The legislation should be tightened and scrutinised. We must cross the t's and dot the i's when it comes to safety requirements. I believe, as do many organisations, especially trade unions, that responsibility for the health and safety of offshore workers should be transferred from the respective departments to the Health and Safety Commission. All trade unions should have a statutory right to nominate

safety representatives to their appropriate safety committees. The number of safety inspectors should be increased, and they should have access to offshore installations without prior notice. We should have a 14 or 15 point charter.
In conclusion, the Bill will have grave repercussions on our energy demands and requirements for the future. I am not certain that the powers that the Secretary of State seeks will give him ample control over the situation. There is some speculation about this. I do not believe that he can dot the i's and cross the t's in this connection. It will be imperative that the Labour party should scrutinise every word in Committee. At the end of the day we can come back to the House and say that the Labour Party has attempted to carry out the most penetrating investigation into what the Secretary of State and the Government are trying to do—hiving off Britain's priceless assets during the next 40 years.

Mr. Archie Hamilton: I welcome the Bill because I believe that it is designed to roll back the powers of the State. I welcome any Bill that is designed to do that, because we must accept that the public sector is much too large and that it dominates much too large a percentage of our gross national product. Our oil industry is basically the product of the success of the private sector, as my right hon. Friend the Secretary of State has already said. It should be returned to the private sector from where it came originally.
As long as profitable companies such as BNOC remain in the public sector, they remain open to political interference. I have yet to meet any politician who does not believe that the re-election of his party is not in the national interest. I can see that the commercial aims of BNOC might well be perverted by people trying to buy popularity in an election. Therefore, the sooner BNOC. gets back into the private sector the better.
It is probably true that the employees of BNOC were initially rather unenthusiastic about being denationalised. They felt that their cosy relationship with the Department of Energy—perhaps even an incestuous relationship—rather suited them. However, as my hon. Friend the Member for Enfield, North (Mr. Eggar) said, when BNOC discovered that it could not get the money that it wished to develop the Clyde field, it suddenly realised that there were great disadvantages in being tied so close to the Treasury's apron strings. At that moment BNOC realised that if the company were to expand and realise its potential as an international oil company it had to get out from under the Treasury.
It is all very well for a nationalised company to say that it will produce huge profits. That means only that those profits will become consolidated in the Treasury forecast and it must apply to get the money back to invest in any form of expansion. That would never happen to a private sector company.

Mr. Rowlands: rose—

Mr. Hamilton: I cannot give way because we are short of time and I know that other hon. Members wish to speak.
If we consider a company such as British Petroleum, it does not allow its profits to be paid out. Most of its profits are ploughed back into the company. The shareholders receive only the dividends, which are a small


percentage of the company's profits. We must have a BNOC that can raise capital on the private market and expand as it wishes into other markets.
My hon. Friend the Member for Bedford (Mr. Skeet) said that we should privatise all of BNOC including the 51 per cent. participation options that it has on all the oil fields in the North Sea. I do not agree with that because I do not believe that the participation options are a commercial activity. They are merely an activity by the Government to guarantee our supply and they should not be put into a commercial company. One can argue about whether those 51 per cent. participation options are a necessary function for the Government because the Government have extensive powers in case of emergency.
When we consider the British Gas Corporation's oil interests, we see a tragic and sad story. When BNOC is floated off we shall have another independent, private, British oil company, of which we do not have many now. There was an opportunity for about £500 million worth of the oil interests of the British Gas Corporation also to form the nucleus of another independent oil company. It would have offered the opportunity of employment in management by employees of the British Gas Corporation. It was a great tragedy that for a long time the BGC sat on the proposal that it should form a separate subsidiary into which private capital could be introduced and then, after a long period of deliberation, said that the proposal was unacceptable.
The result that then followed was that Wytch Farm was taken out of BGC's interests and sold separately, and I doubt whether we shall see a new company emerging from the BGC interests. We shall merely see the oil fields being sold off piecemeal, and an opportunity to form another British oil company will have been lost. That is a great tragedy.
I strongly support the breaking of the BGC monopoly but I see this as being, unfortunately, only a gradual process. The right hon. Member for Leeds, South (Mr. Rees) said that it would be a disaster and would lead to the breaking up of BGC. If that were the case, I should be delighted, because the problem is that we have no way of judging the performance of the British Gas Corporation. It makes profits, but is has exploited as far as it can its monopoly buying powers, and it also has a virtually captive market.
There is the question whether the price of gas will go up once the effects of denationalisation work through. There is a still greater demand for gas than there are supplies, so that there is a shortage of gas. If demand is in excess of supply, initially the result must be that the price will go up. After a time more supplies will become available, and in those circumstances we shall see the market even off as supply and demand get into equilibrium.
We have large nationalised monopolies and they, in their turn, have monopoly unions. These organisations are capable of holding the country to ransom. They do not have to worry whether they keep their customers happy. They are in a very strong position. It is essential that the Government should continue to carry out a programme, wherever possible, of breaking the monopolies, restoring market forces, and giving customers the products they want at prices they are prepared to pay.

Mr. Dennis Canavan: When the Secretary of State first announced these measures he said that without doubt they amounted to the biggest programme of privatisation ever to come before Parliament. If I may change his words slightly, I think that the measures amount to one of the biggest programmes of plundering of the public purse ever to come before Parliament. Tonight we are discussing an attempt at an unprecedented exercise in public asset stripping.
I have never claimed—and I do not think that any Labour Member has claimed during the debate—that our nationalised industries are perfect in every respect. I did not hear any Labour Member give simply a doctrinaire defence of public ownership or of the public sector in general. Socialists are often accused by the Tories of being doctrinaire in their approach and in their arguments, yet now it is the Tories who seem to be hell-bent on a doctrinaire attack on two of our most successful public enterprises, which are serving the needs of the nation.
Historically, many of the successful publicly owned enterprises in Britain—this applies particularly to the energy industries—did not come about for doctrinaire reasons. Indeed, much of the legislation was not implemented by people who called themselves Socialist or Left-wing politicians. Early in this century it was that well-known 'Left-winger', Winston Churchill, who took the public stake in BP. The reason then was to ensure a constant supply of energy to the Armed Forces of the British Empire.
Later, in the 1960s, the Continental Shelf Act 1964, which took all the oil under the seabed within the British sector of the North Sea into public ownership, was carried through, not by a member of the Labour Party but by that well known 'revolutionary', Lord Home, at that time Sir Alec Douglas Home. We then come to the 1970s when the very setting up of the British Gas Corporation was carried out by a Tory Prime Minister, that well known 'extremist', the right hon. Member for Sidcup (Mr. Heath).
Every time, they argued, as we are arguing now, that these examples of public ownership and enterprise were in the national interest. The underlying reason for that was that they believed, as we believe, that energy is far too important a matter to be left simply to free market forces. That, too, was the basic reason why the last Labour Government set up the British National Oil Corporation. I was on the Standing Committee which dealt with the BNOC legislation. Before we did so, we were the only major oil-producing country—or potentially major oil-producing country—in the world without a national oil corporation, with the exception of the United States of America and, of course, we can see the shambles of their energy policy.
We had to fight hard to set up the British National Oil Corporation against opposition not just from the Tory Party but from the Scottish National Party, whose spokesman, I am sorry to see, is not with us just now. The SNP voted against the Bill on Third Reading, supporting the Tories, even though the headquarters of the new national oil corporation were to be based in Scotland, as they now are, providing work for more than 1,100 employees. That number of jobs would have increased, but for this legislation, to about 2,000 in the near future.
Despite the opposition we enacted that Bill, and the corporation's profits are now about £300 million a year, and likely to rise to £500 million the next financial year.
If we made any mistake about extending public ownership into profitable enterprise it was that we did not go far enough. We should have nationalised the whole North Sea oil industry and that would have made this Government's job even more difficult in their attempts to dismantle existing public ownership. I hope that we shall bear that mistake in mind so that we can remedy it the next time we are in Government.

Mr. Tristan Garel-Jones: Will the hon. Member give way?

Mr. Canavan: No, I am sorry. If I do I shall just prevent other hon. Members on that side from speaking in the debate.
By the time we are next in Government, the people will see much of the damage that this Government will have done in their public asset stripping exercises. They will see it in real terms, in terms of prices and jobs, not just in oil but also in gas. For example, the ending of the so-called monopoly or monopsony powers of the British Gas Corporation will mean a virtual auction for gas which will jack up the price, not just for domestic consumers but also for many industrial consumers who are already complaining that the price of gas is too high.
I think, too, of the example of the gas gathering pipeline project, a mixture of public and private enterprise, which was abandoned by this Government of which the hon. Member for Ross and Cromarty (Mr. Gray) is still a member. The abandonment of that pipeline project meant the destrcution of jobs in his constituency and, taking into account also the Invergordon disaster, I do not know how he has the brass neck to sit there on the Front Bench defending the indefensible policies of his Government, policies that are destroying jobs in his constituency and in other areas of Scotland. I have in mind the Grangemouth petrochemical complex, which is quite near my constituency. That gas pipeline would have brought not just gas from the North Sea but jobs down to Central Scotland and other areas of mass unemployment—jobs for my constituents and those of the Minister. The Minister is content for the Government to permit valuable energy resources to go up in smoke. That is what is literally happening under the crazy policy which allows gas to be flared instead of being piped ashore by public enterprise.
I turn to the important aspect of safety which was discussed only briefly by the Secretary of State but which, rightly, was dealt with by other hon. Members. The Secretary of State said that success in the North Sea was due almost entirely to private enterprise and the risks taken by it. I remind him that success in the North Sea is due largely to the efforts of workers and the risks that they take.
North Sea workers live and work in some of the most dangerous offshore working conditions in the world. It is a pity that the Secretary of State did not pay tribute to the workers' efforts. Safety standards in the North Sea leave much to be desired. The health and safety legislation should be extended to cover the North Sea. The employment protection legislation should also be extended to cover workers in the North Sea along the lines of the charter that has been drawn up in draft by the trade unions and some of my hon. Friends.
I have drawn the Minister's attention to instances of unscrupulous, faceless multinational companies acting like pirates by exploiting cheap labour—often foreign—offering the workers miserable wages, hellish and unsafe working conditions and very little, if any, job security. I hope that in Committee amendments will be passed to tighten up the legislation in that respect. The absence of job security and decent safety conditions in the offshore oil and related industries is yet another reason for an extension rather than a reduction in public ownership.
We can compare the offshore oil industry with the coal industry before it was nationalised. Working conditions, the standards of health and safety and job security were deplorable. Only since the nationalisation of the coal industry have miners experienced a significant improvement in job security and in health and safety. That in turn has resulted in improvements in productivity.
The Minister and his henchmen seem to be content to allow the North Sea oil industry to be governed by multinational oil companies which are motivated simply by the desire to maximise profits, sometimes ruthlessly encouraging their workers to take more risks. Unfortunately that sometimes has fatal consequences.
The debate is not simply about public enterprise and private enterprise. It is about whether the rights and aspirations of individuals, whether workers or consumers, should be subordinate to the greedy aspirations of huge multinational companies which are accountable to no one. The debate is about not only the restructuring of the economy, but the restructuring of our society and whether our national assets should be used for the benefit of the whole nation or for the benefit of a privileged few. I hope that hon. Members will vote for the former proposition rather than the latter. Perhaps that is a forlorn hope.
A more realistic hope might be that the next Labour Government implements Labour Party policy, not only by taking back into public ownership the assets that this Government are irresponsibly selling, but by extending the frontiers of public ownership and public enterprise to bring about the industrial, economic and social regeneration that the people want.

9 pm

Mr. John Hannam: The hon. Member for West Stirlingshire (Mr. Canavan) has spoken strongly in support of extended nationalisation. I wish to put a few arguments against that proposition. First, I should like to congratulate my right hon. Friend the Secretary of State on the case he presented in support of the Bill. I should also like to declare an interest in the oil industry.
I strongly support the measures proposed for BNOC and BGC. I reject the arguments of the Opposition that the Government are in some way selling out British interests. The reverse is the case. The strength of our industrial society in the past has been through the pursuit of innovative change and improvement which has taken place year by year with new technologies and new industries replacing old unprofitable ones, and with new managements replacing older, less imaginative administrations.
The doctrinaire Socialist belief in centralised State control, which unfortunately appears today to be supported by the SDP, means that they have to oppose any form of denationalisation even if it makes sense to restore areas of the public sector to private competition. At least, they


pretend to oppose it but their principles are often bent to suit expediency, as happened in 1977 when the Labour Government sold off the majority shareholding in BP.
I should like to comment briefly on the BNOC parts of the Bill. After the Labour Government came to power in 1974, I was on the Committee when the BNOC legislation was going through. Members of my party argued then that it was totally unnecessary to set up such a gigantic, interventionist, State corporation to safeguard the security of supply of North Sea oil and gas. We considered that the requirement to land it here, together with controls over development and depletion operated through a trading arm of the Department of Energy, plus an excess of profits tax system and certain emergency powers in the hands of the Secretary of State would ensure required protection for the British people.
With the creation of BNOC we saw increasing bureaucratic intervention in North Sea activities and subsequently the use of BNOC for political purposes by the right hon. Member for Bristol, South-East (Mr. Benn), who is not present today but who then held the post of Secretary of State for Energy. I believe on principle that where competitive private enterprise can operate profitably the State should stay out of those operations. Only where social conditions necessitate the maintenance of a public service should State-owned corporations exist, if possible in a devolved regional shape rather than as a vast monolithic monopoly. If we had patterned smaller units of administration for electricity and coal we would not be facing the problems of low investment, low productivity and extremely high price increases in the public sector.
I agree with The Times editorial of 15 January headed "Public inefficiency" which pointed out the disastrous record in nationalised industries where, with no market disciplines operating, unit costs have been allowed to increase during the recession, with the result that the consumer has been clobbered by price increases double those of the private sector. If the public sector had contained its price and wage inflation during the last year to the level in private industry, we should certainly be in single figure inflation by now.
I agreed with the Labour Government in 1977 when they disposed of a totally unnecessary majority stake in BP. Incidentally, that sale represented 9 per cent. of North Sea oil production, whereas the sale currently proposed of the 51 per cent. of BNOC shares represents only 3·5 per cent. of North Sea oil production. Therefore, the Opposition clamour about selling off our birthright is pure hypocrisy.
The fact is that, as my right hon. Friend the Secretary of State said in his opening speech, the control of North Sea oil does not rest in BNOC's minor, 7 per cent. share of North Sea oil production. It lies in the trading arm, with its access to 51 per cent. of oil produced in the North Sea, and this will remain in the public sector.
Controls over depletion and development do not lie with BNOC anyway. They are applied by the Department of Energy. Here I should like to pay tribute to the experts in the Department for the extremely efficient way in which they administer the complex and difficult job of issuing oil licences, production licences and gas licences. All the oil companies that I have met—I am sure that my hon. Friends

have had the same experience—have been full of praise for the attention and courtesy that they have received at the Department.
I should like my hon. Friend the Minister of State to deal with the composition of the newly separated trading arm of BNOC. There is always the complicated and delicate responsibility of setting the price structure of North Sea oil. At present the expertise lies in that part of BNOC which will be hived off into the new Britoil company. What does my hon. Friend envisage as the staff structure for the State trading corporation, which he will be setting up and which will continue to be under State control? Will there be a joint working committee, for example, between Britoil and the BNOC trading arm to maintain the level of competence in this vital pricing operation? It is very important that the correct expertise is applied.
Putting the BNOC sale into perspective, I should say that the Government are putting into real public ownership, as distinct from pseudo-public State ownership, about 3·5 per cent. of North Sea oil production. The Government will still retain the largest shareholding and will exert all the necessary controls over oil and gas production to safeguard Britain's interests.
The worry that control of Britoil could pass to a foreign country is countered by the safeguards that my right hon. Friend intends to write into the articles of association. Presumably, the same could have applied to BP in 1977, but I do not recall the Opposition making a song and dance about that requirement then. I shall be interested to hear whether they did.
Britoil is to explore for, find and produce the oil and gas that we need to maintain self-sufficiency through the 1990s. We need to give a major fillip to exploitation and development activity during the coming years. We need to find half as much gas and oil again as have already been discovered. With costs escalating and the size of fields diminishing rapidly, the risk becomes much greater week by week and month by month.
It is interesting to note that, whereas the first 25 commercial fields had an average size of 447 million barrels the following 11 fields discovered and developed were down to 91 million barrels, and the next 37 potentially commercial fields are expected to have only 62 million barrels per field. Therefore, a stable tax regime and a settled depletion policy are essential if we are to regain the momentum of the early 1970s. I believe that the Bill will encourage exploration for oil and gas. If the Government take into account the need to encourage smaller British companies as well as establishing this new, major British oil company, the target of self-sufficiency through the 1990s is eminently attainable.
I turn to British Gas and the proposals for selling off its oil business. It is understandable that its directors and employees are opposed to the proposals, though I regret the manner in which that opposition is being expressed. I see no reason of principle why a monopoly State industry making substantial profits out of low buying and high selling prices should be allowed to diversify into all sorts of other activities, as British Gas is now trying to do. If the gas market is fully opened to competition, and British Gas like Britoil, becomes a minority State shareholding company, competing fairly and squarely with other companies in the gas buying and selling market, diversification can of course be allowed in a fair, normal way. But British Gas turned down the suggestion of my


right hon. Friend the previous Secretary of State of a new oil company in which it would hold a 40 per cent. stake. Therefore, the selling off of the onshore oil interests is perfectly reasonable.
We hear screams of protest from the Opposition, but what did the Labour Government do to the National Coal Board oil interests? They forced the NCB to sell to BNOC assets estimated to be worth about £100 million for a nominal £50,000. The Opposition's evident hypocrisy in arguing their case is borne out again and again in examples taken from their last period in office.
In conclusion, I fully support the Bill and congratulate my right hon. Friend on introducing it so quickly in the Session. I hope that the various points raised will receive close attention in Committee and that the Bill will be put into legislative form so that the new major British oil company will be operating successfully by the end of the year.

Mr. Edward Rowlands: The quality of the speech made by the hon. Member for Exeter (Mr. Hannam) was such that he gave clear expression to Conservative Party doctrine about public ownership. That doctrine is that public ownership must be unprofitable and, therefore, that all profitable public ownership must be sold to private enterprise. That is a "no lose" situation from his ideological point of view and he will not be surprised if we do not support such nonsense.
I shall refer to the whole character and nature of the Secretary of State's speech. In some ways his values, interests, attitude and approach were reflected in the balance of that speech. There were three times as many cheap personal gibes as there were references to the problems of offshore safety in the North Sea. There was not one reference—except to say that part IV existed—to the problems of the diving industry in the North Sea, the problems of safety zones and the problems that have arisen over the safety of rigs. There was nothing in his speech about the terrible problems of safety in the North Sea.
There is no point in the right hon. Gentleman indicating that the Minister of State has yet to speak. He managed to waste 10 minutes on personal political gibes when he could have spent them telling us more about the Government's plans on offshore safety.
The second fact to emerge is that the Bill is an affront to every tradition of parliamentary accountability and legislative scrutiny. That affront is compounded by the fact—which I do not think any hon. Member is aware of other than the Minister and the hon. Member who received the answer—that while we have been debating the Bill, a significant answer has been given to a written question and it is of considerable relevance to the issues that we are now debating. No doubt no one on the Back benches has seen the answer given by the Minister to the hon. Member for Banff (Mr. Myles) on the issue of BNOC's role in LPG supplies, which sets out a policy statement that could affect the ability, viability and the role of the State trading company. That is indicative of the insulting manner in which the right hon. Gentleman and the Minister are treating this House. The character and nature of the Bill, and the way in which major policy statements are given in written answers on the day that we are debating the relevant issues, illustrate that.
As my hon. Friends and others have said, the Bill provides no safeguards or assurances. We have had only

the say-so of the Secretary of State. All he has given is a half revelation about the way in which he intends to tackle the problem of foreign control through the articles of association. There is nothing in the Bill to prevent foreigners taking over the assets. There are no draft measures or articles of association in any legislative form that can be debated and subjected to amendment. The Bill contains no provisions to guarantee the participation agreement to which he referred and which I shall deal with in a few moments. As the hon. Member for Exeter pointed out there is no provision describing the nature of the new State trading company. That company is not the same as the old BNOC, which is being split up. All that will be left is the State trading company. What will be its composition and its duties? There is nothing in the Bill to show what those responsibilities and duties will be, or the composition of the new board or corporation. Will that be put in yet another regulation, subject to annulment under clause 31? There is nothing in the Bill to restrict the Secretary of State's right in respect of any aspect of the sale of BNOC, the oil assets or the equity shares in the subsidiaries. Under clause 2, the Secretary of State takes tremendous power to amend, alter, approve or disapprove any scheme proposed by the BNOC. He also has such power in relation to any schemes proposed by the British Gas Corporation. According to clause 2, not one of the schemes will be subject to any parliamentary approval, amendment or scrutiny. That is the legislation's character and nature.
It is little wonder that my right hon. Friend the Member for Leeds, South (Mr. Rees) and others pointed out that the Bill is nothing but a crude enabling measure that has more affinity with the attitude to Parliament of the extreme Left and Right than with anything else. The Bill seeks to short-circuit parliamentary procedures and accountability.
The Bill's objective is to dismantle and disintegrate BNOC. BNOC has been a remarkable success story. In a curious, grudging way, the Secretary of State had to admit that. He cannot claim that it has a monopoly in the North Sea. Indeed, he has been boasting that private enterprise has dominated North Sea development. He cannot claim that it is unprofitable. Even in its first two years, it has made considerable sums of money. Its cash flow and profitability have made a massive contribution to the public sector borrowing requirement. Several hon Members, including the hon. Member for Epsom and Ewell (Mr. Hamilton) and, in a way, the Secretary of State have argued that BNOC will soon become a burden on the public sector borrowing requirement because of its capital development programme. They argue that it must be freed from the public sector in order to borrow on the private market. That is exactly what it has been doing. Insultingly, the Secretary of State now attributes the name Britoil to the new company. However, it was the name of a loan that a 100 per cent. nationalised oil corporation obtained from the American market. A nationalised corporation has not found any difficulty in borrowing from the private market to finance and support its capital development programme. That is not the reason for denationalising the company and for splitting off its equity interests.
No hon. Member has claimed that BNOC has been inefficient. Not even the Secretary of State has claimed that. His attitude is that it will become inefficient one day, because it will become bureaucratic. However, there is no sign of that. What arguments have been put forward to justify the proposal? In November, and again today, the


Secretary of State said that we should equate national interest not with a national corporation but with the interests of the multinationals in the North Sea. He said that what is good for Texaco and Mobil in the North Sea is good for Britain. Is that his case? Is he arguing that there is a natural equation between the national interest and that of the multinationals? If so, he is almost alone in his naivety.
We are told that the purpose of privatisation is to allow the great British public to obtain a widespread shareholding in the North Sea's assets. That is a cruel deception to perpetrate. The right hon. Gentleman is perpetrating the myth that the average working man, sitting with his broker, will buy or invest in North Sea oil shares. Those institutions and people who buy shares today, will buy these shares as well. It is nonsense that individual working people will somehow invest in the shares and it is a myth that is perpetrated by those who wish to popularise the concept of buying shares.
The idea would be for the pension funds and the financial institutions to take up most of the shares, and we contest the argument that somehow individuals would feel more closely identified with them and have some sort of personal relationship with the development of North Sea oil, if that happened rather than reinvesting in an anonymous pension fund, which subsequently bought a few shares in a privatised company somewhere down the line. The idea that we shall get a popular concept of share-owning capital in the North Sea as a result of these measures is a myth perpetrated by the Secretary of State and the Government.
The shares will end up being owned by the same individuals and institutions that own other shares and who are already the major share buyers in the market.
The most dishonest aspect of the presentation of the case against BNOC and about the issue of privatisation on the oil side has been the Secretary of State's denial that there will be any loss of control—any real loss to the nation's control of supply—and his claim that everything will be all right. The Secretary of State said that the privatising of exploration and production capacity will not mean a loss of control of the nation's oil supplies and that it will be safeguarded by the State oil trading companies and participation agreements. He said that his officials in the Department of Energy, only a handful of whom have any direct experience in the oil industry, will be the front and back lines in the Government's defence of the national oil assets.
No self-respecting oil man would believe the Secretary of State's nonsense. No significant oil company has not, understandably, striven for and achieved integration. The belief that one has to be in exploration, production and the distribution side has been common in the development of every major oil company in the western world. I found no one in the oil industry who believed that a company did not have to be in the process of exploration and production and that it was sufficient merely to explore or to sell. Integration has been a crucial and an essential asset in the development of oil companies. The Government are now breaking up an integrated national oil corporation.
No major oil developing nation fails to recognise the necessity for direct ownership and involvement in exploration and production as a crucial part of national control of a nation's oil assets. Only fools, clowns and the

Government would reduce control or ownership of their national oil assets, especially with the many issues now arising in future oil supply and development.
The Secretary of State's policy will create—we heard nothing about the nature or character of a new State trading oil company—a company that will be weak and vulnerable, divorced from the real action in the North Sea and not serving on any of the vital committees managing the North Sea oilfields. Therefore, it will learn very little about what is happening in the oilfields. It will be trading on the narrowest of margins and buying and selling oil at market price. It will be nothing more than a 10-cent company.
In his opening speech my right hon. Friend the Member for Leeds, South claimed that BNOC members and the board had unanimously said in the past that the establishment of a State trading oil company would be vulnerable, weak and financially unviable. There is no reason to believe that that assessment is wrong.
The Government, Treasury and the Secretary of State are obviously worried that the State trading oil company will be financially weak and vulnerable. That is the reason for this afternoon's announcement about liquefied petroleum gas. The announcement in a written answer states that BNOC and, therefore, the new State trading oil company, should not continue to get involved with the trading in LPG, although that has been one of BNOC's most profitable key markets. The reason for that, of course, is that the Treasury is scared stiff at the prospect of a trading company losing money. If the trading group is divorced from exploration and production it will have to live on the narrowest of margins and it will be an extremely vulnerable outfit. That view is shared by many. I shall be interested to know whether the Minister of State thinks that that is a possible danger.
The danger will be even greater if the Secretary of State dilutes the State corporations's rights in oil participation. I raised the issue in the article to which the right hon. Gentleman referred that appeared in The Observer. I noted with interest his comments and observations today. However he juggles with the privatised Britoil company, I suspect that he will loosen and sell short control over participation oil, especially in the fifth and sixth rounds. Unless he states that the State oil company has 100 per cent. control over all the oil deriving from the fifth and sixth rounds, he will have lost control of a percentage of national oil.

Mr. Skeet: Rubbish.

Mr. Rowlands: The right hon. Gentleman has said that that will not happen. This will be a crucial issue and he fudged it again this afternoon. He said that he would take 50 per cent. control with the option of a higher percentage of control under the fifth and sixth round licences. Unless it is 100 per cent. it will be a loss of control over participation oil. Every one of the licences for the participation oil is guaranteed by the 51 per cent. equity interest under the licences.
Rumours have it that the Government are increasingly likely to take royalty oil in cash and not in kind. That will deprive—

Mr. Lawson: How would the hon. Gentleman take it?

Mr. Rowlands: That will deprive—

Mr. Lawson: Answer.

Mr. Rowlands: That will deprive a State oil trading company of one of its most important sources of oil, which is now worth about 250,000 barrels a day. That is the quantity that now passes through BNOC. It would matter less if it were an integrated company with its own equity interest and its own control over its own oil supply. However, the Government visualise a State trading company that will have no equity interest and no control over its own supply. To deprive the company of another 250,000 barrels a day by taking royalty in cash and not in kind—I am interested that the right hon. Gentleman is not contesting the proposition that that is now the likelihood—will create an even more vulnerable and weaker State trading corporation.
This will be the Government who will create a lame duck out of a national oil corporation. It will be an incredible feat but the right hon. Gentleman is planning just that in his proposals for the State trading oil company. What has come across throughout the speeches that we have heard from Conservative Members is a special sort of bilious prejudice against the public sector. It is directed especially against the oil and gas corporations. That is chiefly because they are profitable, and that is contrary to Conservative law on public enterprises.
The Government have worked up a special hatred of British Gas that is even greater than their hatred of BNOC. The most remarkable allegations have been made against British Gas. I have heard the speech of the hon. Member for Derbyshire, South-East (Mr. Rost) on this issue five or six times and each time I find it even less credible. It was repeated by the hon. Member for Exeter and it has been given credence by those on the Government Front Bench.
We have heard that somehow British Gas sold the nation short by forcing from the poor multinational oil companies a ridiculously low price in the southern gas basin that has been crippling to the national interest. It has been forgotten that British Gas offered all the international oil companies an escalation clause that was based on the increase in the price of oil. The oil companies turned that down because they did not believe that oil prices would rise.
We are told that the British Gas Corporation, by serving Britain well, by negotiating fairly and firmly a range of good prices for the whole of southern gas, has somehow betrayed gas development in the North Sea.

Mr. Skeet: Is not the hon. Gentleman misleading the House? The original price was 2·87 old pence per therm. With escalation clauses it went up to about 6p per therm. We were told in the recent report that the average price paid by British Gas is 10p per therm. Surely, if up to 29p is saved, BGC is making an enormous profit. It is not paying the producers enough.

Mr. Rowlands: I shall discuss who is responsible for high energy prices in a minute. It is not necessarily British Gas.
The real cause of higher prices in the last 18 months to two years are the villains who sit on the Conservative Front Bench. Who told British Gas that it must raise gas prices by 10 per cent. in real terms? It was not Sir Denis Rooke of British Gas, but the Government. The Secretary of State's predecessor went to the Select Committee and confessed as much.
The reason the Government have been pushing up energy prices is that they have been using them as a source

of revenue for the Government and as a form of direct and indirect taxation. They have deliberately jacked up both electricity and gas prices. The idea that British Gas is responsible for the decisions taken by the Secretary of State and his predecessor is shameful.
However, even worse is the argument that the Government now deploy that allowing the oil companies to sell and breaking up British Gas's right of first purchase of all gas landed in Britain will lead to cheaper prices for the industrial consumer. The major demand for that change has come from the oil companies, which want higher prices for their gas from British Gas. They want to use that power as a negotiating lever on British Gas.
The idea that the separation of the oil companies from the BGC will lead to a large-scale gas supply that is cheaper to industry is interesting. I hear through the grapevine that the Secretary of State briefed the press recently to say that he did not think that there would be much in that—about 2 per cent. He told the journalists that, but he did not repeat it in the House today. He said that about 2 per cent. of the market would be taken up.

Mr. Lawson: I did not.

Mr. Rowlands: It must be pure invention by a large number of journalists.
The end game is not to provide the British industrial consumer with an alternative supply more cheaply than that offered by British Gas, but to make possible the export of gas, whether it was landed first in Britain or whether control of the landing rights provisions was removed. The right hon. Gentleman said that it was already possible for countries to re-export gas once it had been landed in Britain. Does he support that view? Will that be a part of the policy? When gas is landed in the United Kingdom, will he stand by and allow the re-export of gas in a free market way? The Minister of State should say whether that is the policy. If he removes the barrier to such exports, what action will he take? That is one of the consequences of the provision in the Bill to remove the rights of British Gas to first purchase.

Mr. Ian Lloyd: Will the hon, Gentleman give way?

Mr. Rowlands: No, I shall not give way. The hon. Gentleman has not been in the Chamber all day and I want to bring my remarks to a conclusion.
As many Opposition Members have said, if the provisions in the Bill on gas prices and the removal of the right of British Gas to first purchase are implemented, the ultimate loser will be the industrial and domestic consumer in Britain. They will be forced to pay higher prices because the British Gas Corporation will be forced to pay higher prices in the North Sea auction that will follow these proposals.
The Bill is an absolute disgrace to every tradition of parliamentary accountability. It will lead to higher, not lower, gas prices for both domestic and industrial consumers. It will lead to the squandering of vital gas assets by the removal of the distinction between premium and non-premium uses. It will lead to a lack of control over the loss of oil assets and a reduction in the overall control of the nation's oil supplies, and it will lead to the sale of precious national assets at prices far below their real value. [Interruption.] The Secretary of State has scarcely been here throughout the debate. I have at least listened to all of it.
Labour Members are therefore committed, as my right hon. Friend the Member for Leeds, South has said, to restore the assets sold off to other interests. No one who speculates or dabbles in this sale will gain a penny from it. That is our message.
Secondly, we shall construct a new and more powerful national oil corporation which, through ownership and involvement in exploration, production and development in the North Sea, will provide the real safeguards and protection for the nation's most precious assets.
That is why I ask my hon. Friends to vote against the Bill today.

The Minister of State, Department of Energy (Mr. Hamish Gray): The hon. Member for Merthyr Tydfil (Mr. Rowlands) has a fairly low boiling point, but tonight even he was stretched to work up any real hostility to the proposals in the Bill. His right hon. Friend the Member for Leeds, South (Mr. Rees) mentioned his anxiety about part IV. My right hon. Friend the Secretary of State said that parts III, IV and V made some useful amendments which both he and I fully expect to be non-controversial, so it is hardly surprising that the hon. Gentleman did not devote much time to part IV.
I must emphasise, however, that Conservative Members are every bit as anxious as the Opposition about safety in the North Sea. The hon. Member for West Stirlingshire (Mr. Canavan) also mentioned safety and I thank him for his, as always, sympathetic remarks. What neither he nor any Opposition Member pointed out is that we enjoy an extremely good safety record in the North Sea as compared with that of others.
We have much to be thankful for and much on which to congratulate those who operate in the North Sea in their willingness to co-operate where we have not legislated to any great extent. We have worked on guidelines and achieved co-operation from both sides. Nevertheless, it is as a result of the recommendations of the Burgoyne committee, responsibility for which I inherited from the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), that some of these provisions are included in the Bill.
The right hon. Member for Leeds, South asked why we were including safety in the Bill rather than dealing with it separately. The reason is quite simple. It is in response to many representations received about implementing the recommendations of the Burgoyne committee that the provisions are included in the Bill. The right hon. Gentleman suggested that part IV be taken out of the Bill and dealt with separately. I must make it quite clear that that is unacceptable to the Government. However, at the beginning of every Committee, consideration is given to the order in which clauses will be taken. If the right hon. Gentleman cares to make representations to us then, we shall consider taking part IV out of sequence and discussing where it can conveniently be taken. We could have talks about where it could conveniently be taken in the debates.
If the right hon. Gentleman is afraid of possible guillotines, I remind him that that is not our responsibility—it is entirely up to the Opposition to ensure that we make progress. Provided that we make reasonable progress, the last thing that the Government want is a

guillotine. When the Leader of the Opposition was Leader of the House, we had five guillotines in one afternoon. The Government are not thinking in terms of guillotines because we are sure that we will make suitable progress.

Mr. Merlyn Rees: I am grateful that the hon. Gentleman has said that we can discuss the matter. I am not suggesting that part IV should go into another Bill, although it is a different subject. I am suggesting that because of the lack of information on it, despite the Burgoyne committee, we should treat it in a different way. This was not suggested to waste time but merely to obtain a different procedure. I hope that the Secretary of State will look at that point.

Mr. Gray: We are only too pleased to co-operate with the Opposition in making reasonable progress on the Bill.
The right hon. Gentleman seemed genuinely disappointed that we had managed to produce a Bill that was not hybrid. That problem has been overcome.
As to information, as far as the Committee is concerned we have already made available the comments on the clauses and we shall continue to make information available as fully as possible. We hope to co-operate with the Opposition in this provided that the information is factual and not confidential.

Mr. Jay: As the hon. Gentleman has offered to co-operate in giving information to the House, will he give two figures? First, what is the total capital value of the public assets to be sold under the Bill and, secondly, what is the future annual revenue loss to the Exchequer?

Mr. Gray: The right hon. Gentleman is aware that I cannot give him the first figure. We do not expect that there will be a loss to the Exchequer. We believe that the ultimate result of these steps will be of benefit to the Exchequer.

Mr. Jay: rose—

Mr. Gray: I shall not give way at the moment.

Mr. Jay: rose—

Mr. Gray: I cannot give way.

Mr. Bob Cryer: Give way.

Mr. Gray: The hon. Gentleman has only just arrived, so he should not make such a noise.
We have had a mixed debate. On this side of this House there have been, I am glad to say, constructive comments that show an appreciation of the need for change in our nationalised industries and an appreciation that the dinosaur of State ownership has outgrown the ability of taxpayers and consumers to support it.
Few doubt the problems posed by nationalised industries. They command a strategic place in the economy but are too often unyielding, unmanageable, unresponsive and unable to adapt to changing circumstances. They are too often protected from the challenge of competition by monopoly and subsidy. Their economic privileges secure them against the need for efficiency and lead to stagnation. They have grown irrespective of the costs to the country—like the dinosaur, they face extinction through their own excesses.
The Government have come forward with constructive proposals. The Bill is a major step forward. It provides for two fundamental remedies. The first is to end unnecessary


State involvement in North Sea exploration, an area where there was no justification for State ownership in the first place.
The success of the North Sea belongs to private enterprise, which accepted the risks and realised the potential. State oil interests were grafted on at a later date only after success had been guaranteed by others. Even then, the lure of public sector privilege was too strong for the Socialists to resist. Not content with State involvement on equal terms, BNOC was created with privileged access to information and given special treatment in licensing rounds.
Secondly, the Bill breaks the BGC's monopoly in the purchase and supply of gas. This unique position was again secured through special privileges. The results are predictable—a stagnant gas market, a reluctance to explore for and to develop gas resources, and complaints about the ability to supply. In an excellent speech, my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) highlighted the difficulties that that presents.
I turn to our proposals for BNOC. Let me deal with some of the accusations that have been levelled against us. The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) questioned the validity of clause 2. I remind him that the clause is in no way new. Similar provisions have appeared in other Acts on many occasions. Indeed, some of the provisions of the Petroleum and Submarine Pipe-lines Act 1975 could have been subject to the same criticism.
It has been said that we are throwing away our controls over the rate at which oil is consumed, and at which gas is flared as well as controls over exploration and development. There is no truth in that. The most charitable explanation I can offer is that perhaps our critics fail to understand exactly what our proposals are. It is hard to see why that should be, because we have made the position abundantly clear. Let me say it all again.
Our regulatory controls will remain exactly the same after the sale of shares in Britoil as they are now. These controls are not vested in BNOC, nor are they exercised by the corporation. They rest with the Government and will be unaffected by the introduction of private capital into BNOC's oil-producing business. Together with our taxation regime they are fully adequate to ensure that the nation derives the greatest benefit from our oil, both in the short and long term.
We have been accused of wanting to sell all our oil interests to foreign multinationals. Here again, the charge is false. My right hon. Friend the Secretary of State has set out our plans to establish Britoil as an independent British oil company, with a wide spread of ownership among the public. I was glad to have the support of the right hon. Member for Greenock and Port Glasgow and the hon. Member for Dundee, East (Mr. Wilson) for this being a company registered in Scotland.
My right hon. Friend has assured the House that safeguards dealing with changes in control of the company will be written into the articles of association and that these articles will be made available to the House. I was asked when. It is our intention to make them available during the progress of the Bill.
Our critics claim that we shall be weakening our control over the destination of North Sea oil. Again that is wrong. We have been at pains to point out that the participation agreements designed to strengthen the security of our oil supplies will not be affected by our proposals. BNOC will

remain wholly Government controlled, trading primarily in participation oil. Of course, the landing requirements for North Sea oil will not be changed.
Put simply, these criticisms, purported to be made in the national interest, serve only the narrow interest of those who wish to see the public sector expand at any cost. The reality is that our plans for BNOC will not diminish the benefits of North Sea oil to the British people but will enhance them. The full potential of BNOC's oil-producing business can best be realised once it is free of the inevitable financial and statutory constraints inherent in Government control. We are determined to press ahead with these plans.
My hon. Friend the Member for Bedford (Mr. Skeet)—there can be few hon. Members with more knowledge of the industry than he—asked questions relating to the fifth and sixth rounds. He has also asked an extensive series of written questions, which I shall answer in due course.
From Opposition Members we have heard a predictable dirge of complaints. Their response to our proposals for competition, efficiency and enterprise was totally unimaginative. They can offer only State control, monopoly and the stifling of initiative. They are engaged in a desperate defence of the public sector, right or wrong, but they do not know how to make the public sector a success.

Mr. Douglas: The Minister is saying that a reconverted BNOC would be more enterprising. Let me take a concrete example. BNOC could place an order for an advanced drilling plant with Scott Lithgow of Port Glasgow in association with Ben Line and Odeco, because it knows that it has access to blocks in the North Sea that can use the rig. Under the Bill it could not do that because it would not have access to the field.

Mr. Gray: Not for the first time, the hon. Gentleman has got it quite wrong. BNOC is no different from any other company. The other companies that operate in the North Sea are still subject to the same pressures as BNOC in placing orders in this country.
Although the Opposition constantly defend the public sector, they still have not found the secret of making it a success. I quote one of their leading thinkers who, in a recent book, recognised the problem frankly, to his credit. He said:
The Labour constitution calls for common ownership—not nationalisation—and for the achievement of 'the best obtainable system of popular administration and control of each industry or service'. In that sense the nationalised industries established after the war have been a great disappointment. It is true that they have proved that investment can be channelled in to equip basic industries such as railways, coal, electricity and gas. But the huge state corporations, run on the very same economic criteria as private corporations under authoritarian management, have altogether failed to realise the hopes of those who campaigned for public ownership".
Those remarks, which have a ring of honesty, are the views of the right hon. Member for Bristol, South-East (Mr. Benn), writing last year. He says a lot more:
Common ownership has been confined to one form of bureaucratic nationalisation, which has destroyed many of the purposes for which it was developed and alienated the whole system in the public mind".
How right he is. It is that bureaucratic nationalisation that we wish to fight and which we shall fight through the Bill.
I come now to part II, which deals with gas. I regret that Opposition Members have not supported our


proposals for the gas industry. I believe that they will prove highly beneficial and that many of the fears that have been expressed are misconceived.
Natural gas is a valuable and important commodity. It is therefore essential that the Government set the right framework for encouraging the most efficient development and use of this resource. We take the view that the best way to do this is to introduce competition wherever possible, so that initiative and enterprise are encouraged and rewarded. The gas market is at present almost totally dominated by the British Gas Corporation as a result of special privileges conferred on it by statute. It is effectively a monopoly supplier to all types of consumers and the operator and sole user of the national pipeline system, as well as having monopoly buyer's rights of offshore natural gas.
The hon. Member for Newcastle upon Tyne, West (Mr. Brown) was worried about security of supply. I can confirm to him that the BGC position regarding domestic supply is unchanged. Lack of competition has resulted in some industrialists being unable to obtain supplies even though they are willing and able to pay for them. Of course, the BGC has had considerable achievements in the development of the gas industry, but we believe that this has now reached a point where excessive monopoly power will continue to be damaging and stifling.
Furthermore, we believe that the British Gas Corporation should no longer be involved in the production of oil when this work could be better done by the private sector. We are therefore taking powers to privatise BGC's offshore oil interests so that these assets can be developed by the private sector which has been the driving force behind the successful development of the North Sea.
We believe that these policies will inject the same vigour into future exploration as has been evident in the dynamic entrepreneurial activity displayed in the search for oil. Licensees have shown reluctance to search for gas, and even when this has been found it has all too often been left in the ground. The culprit is not the BGC: it is the system of monopoly purchase, which gives the producers just one outlet for their gas. Should British Gas decide not even to offer a bid for a certain field, preferring to take other gas first, the producer is absolutely powerless. I do not blame the BGC for decisions that it has taken in a monopoly context, because it could be to its advantage to delay purchase—but only a very short-term advantage. We believe that the existing structure is no longer adequate. Our legislation will ensure that the BGC will in future be bidding in a competitive market and that licensees shall in future have a choice of more than one purchaser.
Another serious disadvantage of the present regime is that a number of large, particularly industrial, consumers, which are willing and able to pay for gas supplies, cannot obtain them from the BGC. At the moment, they have nowhere else to turn, but in future we shall be giving them the opportunity of negotiating private supplies of gas. Our measures will ensure that prices in the future are set in a competitive environment and that an industrialist who thinks that BGC's price is too high will have the option of looking elsewhere.
It has been suggested that liberating the market will result in gas being used in ways which do not reflect its full value.

Mr. Douglas: Exports.

Mr. Gray: In my view, these dangers arise where there is a monopoly and where market forces cannot operate. Allowing industry to decide in the market place what is the value of gas will ensure that the gas flows to those places where it has the highest value. At the moment, BGC chooses the uses best suited for it. This policy is bound to involve guesswork and is no substitute for allowing the market to decide where gas can be put to the best use.

Several Hon. Members: rose—

Mr. Robert C. Brown: On a point of order, Mr. Deputy Speaker. I asked the Minister five precise questions and I did not get an answer to any of those five questions. That is a gross discourtesy to the House.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Mr. Gray.

Mr. Gray: That shows, if any proof were needed, that if the Labour Party is really opposed to the Bill, it has a strange way of going about it.

Question put, That the Bill be now read a Second time:

The House divided: Ayes 300, Noes 247.

Division No. 40]
[9.59 pm


AYES


Adley, Robert
Churchill, W.S.


Aitken, Jonathan
Clark, Hon A. (Plym'th, S'n)


Alexander, Richard
Clarke, Kenneth(Rushcliffe)


Alison, Rt Hon Michael
Clegg, Sir Walter


Amery, Rt Hon Julian
Cockeram, Eric


Ancram, Michael
Colvin, Michael


Arnold, Tom
Cope, John


Aspinwall, Jack
Cormack, Patrick


Atkins, Rt Hon H.(S'thorne)
Corrie, John


Atkins, Robert(PrestonN)
Costain, SirAlbert


Atkinson, David (B'm'th, E)
Cranborne, Viscount


Baker, Nicholas (N Dorset)
Critchley, Julian


Beaumont-Dark, Anthony
Crouch, David


Bell, SirRonald
Dean, Paul(North Somerset)


Bendall, Vivian
Dickens, Geoffrey


Benyon, Thomas(A'don)
Dorrell, Stephen


Benyon, W.(Buckingham)
Douglas-Hamilton, LordJ.


Best, Keith
Dover, Denshore


Bevan, David Gilroy
du Cann, Rt Hon Edward


Biffen, Rt HonJohn
Dunn, Robert(Dartford)


Biggs-Davison, SirJohn
Durant, Tony


Blackburn, John
Dykes, Hugh


Blaker, Peter
Eden, Rt Hon SirJohn


Body, Richard
Edwards, Rt Hon N. (P'broke)


Bonsor, SirNicholas
Eggar, Tim


Bottomley, Peter(W'wichW)
Elliott, SirWilliam


Bowden, Andrew
Emery, Sir Peter


Boyson, Dr Rhodes
Eyre, Reginald


Braine, SirBernard
Fairbairn, Nicholas


Bright, Graham
Fairgrieve, SirRussell


Brinton, Tim
Faith, Mrs Sheila


Brittan, Rt. Hon. Leon
Farr, John


Brooke, Hon Peter
Fell, SirAnthony


Brotherton, Michael
Fenner, Mrs Peggy


Brown, Michael(Brigg&amp;Sc'n)
Finsberg, Geoffrey


Browne, John(Winchester)
Fisher, Sir Nigel


Bruce-Gardyne, John
Fletcher, A.(Ed'nb'gh N)


Bryan, Sir Paul
Fletcher-Cooke, SirCharles


Buchanan-Smith, Rt. Hon.A.
Fookes, Miss Janet


Buck, Antony
Forman, Nigel


Budgen, Nick
Fowler, Rt Hon Norman


Bulmer, Esmond
Fox, Marcus


Burden, SirFrederick
Fraser, Peter (South Angus)


Butcher, John
Fry, Peter


Cadbury, Jocelyn
Gardner, Edward(S Fylde)


Carlisle, John (Luton West)
Garel-Jones, Tristan


Carlisle, Kenneth (Lincoln)
Gilmour, Rt Hon Sir Ian


Chalker, Mrs. Lynda
Glyn, Dr Alan


Channon, Rt. Hon. Paul
Goodhart, SirPhilip


Chapman, Sydney
Goodhew, SirVictor






Goodlad, Alastair
Maxwell-Hyslop, Robin


Gorst, John
Mayhew, Patrick


Gow, Ian
Mellor, David


Grant, Anthony (HarrowC)
Meyer, SirAnthony


Gray, Hamish
Miller, Hal (B'grove)


Greenway, Harry
Mills, lain (Meriden)


Grieve, Percy
Mills, Peter (West Devon)


Griffiths, E.(B'y St. Edm'ds)
Miscampbell, Norman


Griffiths, Peter Portsm'thN)
Moate, Roger


Grist, Ian
Monro, SirHector


Grylls, Michael
Montgomery, Fergus


Gummer, JohnSelwyn
Moore, John


Hamilton, HonA.
Morris, M. (N'hamptonS)


Hamilton, Michael (Salisbury)
Morrison, HonC. (Devizes)


Hampson, Dr Keith
Morrison, Hon P. (Chester)


Hannam, John
Mudd, David


Haselhurst, Alan
Murphy, Christopher


Hastings, Stephen
Myles, David


Havers, Rt Hon Sir Michael
Neale, Gerrard


Hawkins, Paul
Needham, Richard


Hawksley, Warren
Nelson, Anthony


Heath, Rt Hon Edward
Neubert, Michael


Heddle, John
Newton, Tony


Henderson, Barry
Nott, Rt Hon John


Heseltine, Rt Hon Michael
Onslow, Cranley


Hicks, Robert
Oppenheim, Rt Hon Mrs S.


Higgins, Rt Hon Terence L.
Osborn, John


Hill, James
Page, John (Harrow, West)


Hogg, HonDouglas (Gr'th'm)
Page, Richard (SW Herts)


Holland, Philip (Carlton)
Parkinson, Rt Hon Cecil


Hooson, Tom
Parris, Matthew


Hordern, Peter
Patten, Christopher (Bath)


Howe, Rt Hon Sir Geoffrey
Patten, John (Oxford)


Howell, Rt Hon D.(G'ldf'd)
Pattie, Geoffrey


Howell, Ralph (NNorfolk)
Pawsey, James


Hunt, David (Wirral)
Percival, Sir Ian


Irving, Charles(Cheltenham)
Peyton, Rt Hon John


Jenkin, Rt Hon Patrick
Pink, R.Bonner


Jessel, Toby
Pollock, Alexander


JohnsonSmith, Geoffrey
Porter, Barry


Jopling, Rt Hon Michael
Prentice, Rt Hon Reg


Joseph, Rt Hon Sir Keith
Price, Sir David (Eastleigh)


Kaberry, SirDonald
Prior, Rt Hon James


Kershaw, Sir Anthony
Proctor, K. Harvey


Kimball, Sir Marcus
Pym, Rt Hon Francis


King, Rt Hon Tom
Raison, Timothy


Knox, David
Rathbone, Tim


Lamont, Norman
Rees, Peter (Dover and Deal)


Lang, Ian
RhodesJames, Robert


Langford-Holt, SirJohn
Ridley, Hon Nicholas


Latham, Michael
Ridsdale, Sir Julian


Lawrence, Ivan
Rifkind, Malcolm


Lawson, Rt Hon Nigel
Roberts, M. (Cardiff NW)


Lee, John
Roberts, Wyn (Conway)


LeMarchant, Spencer
Rossi, Hugh


Lennox-Boyd, HonMark
Rost, Peter


Lester, Jim (Beeston)
Royle, SirAnthony


Lewis, Kenneth (Rutland)
Sainsbury, Hon Timotny


Lloyd, Ian (Havant &amp; W'loo)
St. John-Stevas, Rt Hon N.


Lloyd, Peter (Fareham)
Scott, Nicholas


Loveridge, John
Shaw, Giles (Pudsey)


Lyell, Nicholas
Shaw, Michael (Scarborough)


McCrindle, Robert
Shelton, William (Streatham)


Macfarlane, Neil
Shepherd, Colin (Herefbrd)


MacGregor, John
Shepherd, Richard


MacKay, John (Argyll)
Shersby, Michael


Macmillan, Rt Hon M.
Silvester, Fred


McNair-Wilson, M. (N'bury)
Sims, Roger


McNair-Wilson, P. (NewF'st)
Skeet, T. H. H.


McQuarrie, Albert
Smith, Dudley


Madel, David
Speed, Keith


Major, John
Speller, Tony


Marland, Paul
Spence, John


Marlow, Antony
Spicer, Michael (S Worcs)


Marshall, Michael (Arundel)
Sproat, Iain


Marten, Rt Hon Neil
Squire, Robin


Mates, Michael
Stainton, Keith


Maude, Rt Hon Sir Angus
Stanbrook, lvor


Mawby, Ray
Stanley, John


Mawhinney, DrBrian
Steen, Anthony





Stewart, A. (ERenfrewshire)
Walker, B. (Perth)


Stewart, Ian (Hitchin)
Walker-Smith, Rt Hon Sir D.


Stokes, John
Waller, Gary


Stradling Thomas, J.
Walters, Dennis


Taylor, Teddy (S'end E)
Ward, John


Tebbit, Rt Hon Norman
Warren, Kenneth


Temple-Morris, Peter
Watson, John


Thatcher, Rt Hon Mrs M.
Wells, Bowen


Thomas, Rt Hon Peter
Wells, John (Maidstone)


Thompson, Donald
Whitelaw, Rt Hon William


Thorne, Neil (llfordSouth)
Whitney, Raymond


Thornton, Malcolm
Wickenden, Keith


Townsend, Cyril D, (B'heath)
Wilkinson, John


Trippier, David
Williams, D. (Montgomery)


Trotter, Neville
Winterton, Nicholas


van Straubenzee, Sir W.
Wolfson, Mark


Vaughan, Dr Gerard
Young, SirGeorge (Acton)


Viggers, Peter
Younger, Rt Hon George


Waddington, David



Wakeham, John
Tellers for the Ayes:


Waldegrave, Hon William
Mr. Anthony Berry and


Walker, Rt Hon P.(W'cester)
Mr. Carol Mather.


NOES


Abse, Leo
Dobson, Frank


Adams, Allen
Dormand, Jack


Allaun, Frank
Douglas, Dick


Alton, David
Dunlop, John


Anderson, Donald
Dunnett, Jack


Archer, Rt Hon Peter
Dunwoody, Hon Mrs G.


Ashley, Rt Hon Jack
Eadie, Alex


Ashton, Joe
Eastham, Ken


Atkinson, N.(H'gey)
Edwards, R. (W'hampt'n S E)


Bagier, Gordon AT.
Ellis, R.(NED'bysh're)


Barnett, Guy (Greenwich)
Ellis, Tom (Wrexham)


Barnett, Rt Hon Joel (H'wd)
Ennals, Rt Hon David


Beith, A.J.
Evans, Ioan (Aberdare)


Benn, Rt Hon Tony
Evans, John (Newton)


Bennett, Andrew(St'kp'tN)
Ewing, Harry


Bidwell, Sydney
Faulds, Andrew


Booth, Rt Hon Albert
Field, Frank


Boothroyd, MissBetty
Flannery, Martin


Bottomley, RtHonA, (M'b'ro)
Fletcher, L. R. (IIkeston)


Bradley, Tom
Fletcher, Ted (Darlington)


Bray, Dr Jeremy
Foot, Rt Hon Michael


Brown, R. C. (N'castle W)
Ford, Ben


Brown, Ronald W. (H'ckn'yS)
Forrester, John


Brown, Ron (E'burgh, Leith)
Foster, Derek


Buchan, Norman
Foulkes, George


Callaghan, Jim (Mdd't'n &amp; S)
Fraser, J. (Lamb'th, N'w'd)


Campbell, Ian
Freeson, Rt Hon Reginald


Campbell-Savours, Dale
Freud, Clement


Canavan, Dennis
Garrett, John (Norwich S)


Cant, R. B.
Garrett, W. E. (Wallsend)


Carmichael, Neil
George, Bruce


Carter-Jones, Lewis
Gilbert, Rt Hon Dr John


Cartwright, John
Ginsburg, David


Clark, Dr David (S Shields)
Golding, John


Cocks, Rt Hon M. (B'stolS)
Graham, Ted


Coleman, Donald
Grant, George (Morpeth)


Concannon, Rt Hon J. D.
Grant, John (Islington C)


Conlan, Bernard
Hamilton, James (Bothwell)


Cook, Robin F.
Hamilton, W. W. (C'tral Fife)


Cowans, Harry
Harrison, Rt Hon Walter


Cox,.T. (W'dsw'th, Toot'g)
Hattersley, Rt Hon Roy


Craigen, J.M.(G'gow, M'hill)
Haynes, Frank


Crawshaw, Richard
Healey, Rt Hon Denis


Crowther, Stan
Heffer, Eric S.


Cryer, Bob
Holland, S.(L'b'th, Vauxh'll)


Cunningham, G.(IslingtonS)
HomeRobertson, John


Dalyell, Tam
Homewood, William


Davidson, Arthur
Hooley, Frank


Davies, Rt Hon Denzil (L'lli)
Horam, John


Davies, Ifor (Gower)
Howell, Rt Hon D.


Davis, Clinton (Hackney C)
Howells, Geraint


Davis, T. (B'ham, Stechf'd)
Hoyle, Douglas


Deakins, Eric
Huckfield, Les


Dean, Joseph (Leeds West)
Hudson Davies, Gwilym E.


Dewar, Donald
Hughes, Mark (Durham)


Dixon, Donald
Hughes, Robert (Aberdeen N)






Hughes, Roy (Newport)
Race, Reg


Janner, HonGreville
Rees, Rt Hon M (Leeds S)


Jay, Rt Hon Douglas
Richardson, Jo


John, Brynmor
Roberts, Albert (Normanton)


Johnson, James (Hull West)
Roberts, Ernest (Hackney N)


Johnson, Walter (Derby S)
Roberts, Gwilym (Cannock)


Johnston, Russell (Inverness)
Robertson, George


Jones, Rt Hon Alec (Rh'dda)
Robinson, G. (Coventry NW)


Jones, Barry (East Flint)
Rooker, J. W.


Jones, Dan (Burnley)
Roper, John


Kaufman, Rt Hon Gerald
Ross, Ernest (Dundee West)


Kerr, Russell
Ross, Stephen (Isle of Wight)


Kilroy-Silk, Robert
Rowlands, Ted


Lambie, David
Ryman, John


Lamborn, Harry
Sandelson, Neville


Lamond, James
Sever, John


Leadbitter, Ted
Sheerman, Barry


Leighton, Ronald
Sheldon, Rt Hon R.


Lewis, Arthur (N'hamNW)
Shore, Rt Hon Peter


Lewis, Ron (Carlisle)
Short, Mrs Renée


Litherland, Robert
Silkin, Rt Hon J. (Deptford)


Lofthouse, Geoffrey
Silkin, Rt Hon S. C. (Dulwich)


Lyons, Edward (Bradf'd W)
Silverman, Julius


Mabon, Rt Hon Dr J. Dickson
Skinner, Dennis


McCartney, Hugh
Smith, Rt Hon J. (N Lanark)


McDonald, DrOonagh
Snape, Peter


McKay, Allen (Penistone)
Soley, Clive


McKelvey, William
Spearing, Nigel


MacKenzie, Rt Hon Gregor
Spriggs, Leslie


Maclennan, Robert
Stallard, A.W.


McMahon, Andrew
Steel, Rt Hon David


McNally, Thomas
Stewart, Rt Hon D. (W Isles)


McNamara, Kevin
Stoddart, David


McTaggart, Robert
Stott, Roger


McWilliam, John
Strang, Gavin


Magee, Bryan
Straw, Jack


Marshall, D (G'gowS'ton)
Summerskill, Hon Dr Shirley


Marshall, Dr Edmund (Goole)
Thomas, Dafydd (Merioneth)


Marshall, Jim (LeicesterS)
Tbomas, Jetirey (Abertillery)


Martin, M (G'gowS'burn)
Thomas, DrR. (Carmartrten)


Maxton, John
Thorne, Stan (Preston South)


Maynard, Miss Joan
Tilley, John


Meacher, Michael
Tinn, James


Mellish, Rt Hon Robert
Torney, Tom


Mikardo, Ian
Varley, Rt Hon Eric G.


Millan, Rt Hon Bruce
Wainwright, E. (DearneV)


Miller, Dr M.S. (E Kilbride)
Wainwright, R. (Colne V)


Mitchell, Austin (Grimsby)
Walker, Rt Hon H. (D'caster)


Mitchell, R.C. (Soton Itchen)
Watkins, David


Morris, Rt Hon A. (W'shawe)
Weetch, Ken


Morris, Rt Hon C. (O'shaw)
Wellbeloved, James


Moyle, Rt Hon Roland
Welsh, Michael


Mulley, Rt Hon Frederick
White, Frank R.


Newens, Stanley
Whitehead, Phillip


Oakes, Rt Hon Gordon
Whitlock, William


Ogden, Eric
Willey, Rt Hon Frederick


O'Halloran, Michael
Williams, Rt Hon A. (S'sea W)


O'Neill, Martin
Williams, Rt Hon Mrs (Crosby)


Orme, Rt Hon Stanley
Wilson, Gordon (Dundee E)


Owen, Rt Hon Dr David
Wilson, Rt Hon Sir H. (H'ton)


Palmer, Arthur
Winnick, David


Park, George
Woodall, Alec


Parker, John
Woolmer, Kenneth


Pavitt, Laurie
Wrigglesworth, Ian


Pendry, Tom
Wright, Sheila


Penhaligon, David



Pitt, William Henry
Tellers for the Noes:


Powell, Raymond (Ogmore)
Mr. Lawrence Cunliffe and


Prescott, John
Mr. George Morton.


Price, C. (Lewisham W)

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — Oil and Gas (Enterprise) [Money]

Queen's recommendation having been signified—Motion made and Question proposed, 
That, for the purposes of any Act of the present Session to make further provision with respect to the British National Oil Corporation, to abolish the National Oil Account, to make further provision with respect to the British Gas Corporation and to make provision for and in connection with the supply of gas through pipes by persons other than the Corporation, it is expedient to authorise the payment out of moneys provided by Parliament of—

(1) any sums required by the Secretary of State for making payments by way of consideration for any shares transferred to him by order under the Act;
(2) any sums required by the Secretary of State for making grants to the British National Oil Corporation or any of its wholly owned subsidiaries towards expenditure incurred by the Corporation or subsidiary in or in connection with the exercise of the power conferred on the Corporation by section 2(1)(e) of the Petroleum and Submarine Pipe-lines Act 1975;
(3) any administrative expenses of the Secretary of State; and
(4) any increase attributable to the provisions of the Act in the sums which under any other enactment are paid out of moneys so provided.


And that it is expedient to authorise the payment of any sums into the National Loans Fund or the Consolidated Fund.—[Mr. Brooke.]

The House divided: Ayes 297, Noes 242.

Division No. 41]
[10.14 pm


AYES


Adley, Robert
Carlisle, Kenneth (Lincoln)


Aitken, Jonathan
Chalker, Mrs. Lynda


Alexander, Richard
Channon, Rt. Hon. Paul


Alison, Rt Hon Michael
Chapman, Sydney


Amery, Rt Hon Julian
Churchill, W.S.


Ancram, Michael
Clark, Hon A. (Plym'th, S'n)


Arnold, Tom
Clarke, Kenneth (Rushcliffe)


Aspinwall, Jack
Clegg, Sir Walter


Atkins, Rt Hon H. (S'thorne)
Cockeram, Eric


Atkins, Robert (PrestonA)
Colvin, Michael


Atkinson, David (B'm'th, E)
Cope, John


Baker, Nicholas (N Dorset)
Cormack, Patrick


Beaumont-Dark, Anthony
Corrie, John


Bell, SirRonald
Costain, SirAlbert


Bendall, Vivian
Cranborne, Viscount


Benyon, Thomas (A'don)
Critchley, Julian


Benyon, W. (Buckingham)
Crouch, David


Best, Keith
Dean, Paul (North Somerset)


Bevan, DavidGilroy
Dickens, Geoffrey


Biffen, Rt Hon John
Dorrell, Stephen


Biggs-Davison, SirJohn
Douglas-Hamilton, LordJ.


Blackburn, John
Dover, Denshore


Blaker, Peter
du Cann, Rt Hon Edward


Body, Richard
Dunn, Robert (Dartford)


Bonsor, SirNicholas
Durant, Tony


Bottomley, Peter (W'wich W)
Dykes, Hugh


Bowden, Andrew
Eden, Rt Hon Sir John


Boyson, Dr Rhodes
Edwards, Rt Hon N. (P'broke)


Braine, SirBernard
Eggar, Tim


Bright, Graham
Elliott, SirWilliam


Brinton, Tim
Emery, Sir Peter


Brittan, Rt. Hon. Leon
Eyre, Reginald


Brooke, Hon Peter
Fairbairn, Nicholas


Brotherton, Michael
Fairgrieve, SirRussell


Brown, Michael (Brigg &amp; Sc'n)
Faith, Mrs Sheila


Browne, John (Wincriesfer)
Farr, John


Bruce-Gardyne, John
Fell, Sir Anthony


Bryan, Sir Paul
Fenner, Mrs Peggy


Buchanan-Smith, Rt. Hon. A.
Finsberg, Geoffrey


Buck, Antony
Fisher, SirNigel


Budgen, Nick
Fletcher, A. (Ed'nb 'gh N)


Bulmer, Esmond
Fletcher-Cooke, SirCharles


Burden, SirFrederick
Fookes, Miss Janet


Butcher, John
Forman, Nigel


Cadbury, Jocelyn
Fowler, Rt Hon Norman


Carlisle, John (Luton West)
Fox, Marcus






Fraser, Peter (South Angus)
Marshall, Michael (Arundel)


Fry, Peter
Marten, Rt Hon Neil


Gardner, Edward (SFylde)
Mates, Michael


Garel-Jones, Tristan
Mawby, Ray


Gilmour, Rt HonSirlan
Mawhinney, DrBrian


Glyn, Dr Alan
Maxwell-Hyslop, Robin


Goodhart, SirPhilip
Mayhew, Patrick


Goodhew, SirVictor
Mellor, David


Goodlad, Alastair
Meyer, Sir Anthony


Gorst, John
Miller, Hal (B'grove)


Gow, Ian
Mills, lain (Meriden)


Grant, Anthony (Harrow C)
Mills, Peter (West Devon)


Gray, Hamish
Miscampbell, Norman


Greenway, Harry
Moate, Roger


Grieve, Percy
Monro, SirHector


Griffiths, E. (B 'ySt. Edm 'ds)
Montgomery, Fergus


Griffiths, Peter Portsm'thN)
Moore, John


Grist, Ian
Morris, M. (N'hampton S)


Grylls, Michael
Morrison, HonC. (Devizes)


Gummer, JohnSelwyn
Morrison, Hon P. (Chester)


Hamilton, Hon A.
Mudd, David


Hamilton, Michael (Salisbury)
Murphy, Christopher


Hampson, Dr Keith
Myles, David


Hannam, John
Neale, Gerrard


Haselhurst, Alan
Needham, Richard


Hastings, Stephen
Nelson, Anthony


Havers, Rt Hon Sir Michael
Neubert, Michael


Hawkins, Paul
Newton, Tony


Hawksley, Warren
Nott, Rt Hon John


Heath, Rt Hon Edward
Onslow, Cranley


Heddle, John
Oppenheim, Rt Hon Mrs S.


Henderson, Barry
Osborn, John


Heseltine, Rt Hon Michael
Page, John (Harrow, West)


Hicks, Robert
Page, Richard (SW Herts)


Higgins, Rt HonTerence L.
Parkinson, Rt Hon Cecil


Hill, James
Parris, Matthew


Hogg, HonDouglas (Gr'th'm)
Patten, Christopher (Bath)


Holland, Philip (Carlton)
Patten, John (Oxford)


Hooson, Tom
Pattie, Geoffrey


Hordern, Peter
Pawsey, James


Howe, Rt Hon Sir Geoffrey
Percival, Sirlan


Howell, Rt Hon D. (G'ldf'd)
Peyton, Rt Hon John


Howell, Ralph (NNorfolk)
Pink, R. Bonner


Hunt, David (Wirral)
Pollock, Alexander


Irving, Charles (Cheltenham)
Porter, Barry


Jenkin, Rt Hon Patrick
Prentice, Rt Hon Reg


Jessel, Toby
Price, SirDavid (Eastleigh)


JohnsonSmith, Geoffrey
Prior, Rt Hon James


Jopling, Rt Hon Michael
Proctor, K.Harvey


Joseph, Rt Hon Sir Keith
Pym, Rt Hon Francis


Kaberry, SirDonald
Raison, Timothy


Kershaw, SirAnthony
Rathbone, Tim


Kimball, SirMarcus
Rees, Peter (Dover and Deal)


King, Rt Hon Tom
Rhodes James, Robert


Knox, David
Ridley, Hon Nicholas


Lament, Norman
Ridsdale, SirJulian


Lang, Ian
Rifkind, Malcolm


Langford-Holt, SirJohn
Roberts, M. (Cardiff NW)


Latham, Michael
Roberts, Wyn (Conway)


Lawrence, Ivan
Rossi, Hugh


Lawson, Rt Hon Nigel
Rost, Peter


Lee, John
Sainsbury, HonTimothy


Lennox-Boyd, HonMark
St. John-Stevas, Rt Hon N.


Lester, Jim (Beeston)
Scott, Nicholas


Lewis, Kenneth (Rutland)
Shaw, Giles (Pudsey)


Lloyd, Ian (HavantA W'loo)
Shaw, Michael (Scarborough)


Lloyd, Peter (Fareham)
Shelton, William (Streatham)


Loveridge, John
Shepherd, Colin (Hereford)


Lyell, Nicholas
Shepherd, Richard


McCrindle, Robert
Shersby, Michael


Macfarlane, Neil
Silvester, Fred


MacGregor, John
Sims, Roger


MacKay, John (Argyll)
Skeet, T. H. H.


McNair-Wilson, M. (N'bury)
Smith, Dudley


McNair-Wilson, P. (NewF'st)
Speed, Keith


McQuarrie, Albert
Speller, Tony


Madel, David
Spence, John


Major, John
Spicer, Michael (S Worcs)


Marland, Paul
Sproat, Iain


Marlow, Antony
Squire, Robin





Stainton, Keith
Waldegrave, Hon William


Stanbrook, lvor
Walker, Rt Hon P.(W'cester)


Stanley, John
Walker, B. (Perth)


Steen, Anthony
Walker-Smith, Rt Hon Sir D.


Stewart, A. (ERenfrewshire)
Waller, Gary


Stewart, Ian (Hitchin)
Walters, Dennis


Stokes, John
Ward, John


Stradling Thomas, J.
Warren, Kenneth


Taylor, Teddy (S'endE)
Watson, John


Tebbit, RtHon Norman
Wells, Bowen


Temple-Morris, Peter
Wells, John (Maidstone)


Thatcher, Rt Hon Mrs M.
Whitelaw, Rt Hon William


Thomas, Rt Hon Peter
Whitney, Raymond


Thompson, Donald
Wickenden, Keith


Thorne, Neil (IIford South)
Wilkinson, John


Thornton, Malcolm
Williams, D. (Montgomery)


Townsend, Cyril D, (B'heath)
Winterton, Nicholas


Trippier, David
Wolfson, Mark


Trotter, Neville
Young, SirGeorge (Acton)


van Straubenzee, Sir W.
Younger, Rt Hon George


Vaughan, DrGerard



Viggers, Peter
Tellers for the Ayes:


Waddington, David
Mr. Anthony Berry and


Wakeham, John
Mr. Carol Mather.


NOES


Abse, Leo
Dewar, Donald


Adams, Allen
Dixon, Donald


Allaun, Frank
Dobson, Frank


Alton, David
Dormand, Jack


Anderson, Donald
Douglas, Dick


Archer, Rt Hon Peter
Dunlop, John


Ashley, Rt Hon Jack
Dunnett, Jack


Ashton, Joe
Dunwoody, Hon Mrs G.


Atkinson, N.(H'gey)
Eiadie, Alex


Bagier, Gordon AT.
Elastham, Ken


Barnett, Guy (Greenwich)
Eidwards, R. (W'hampt'n S E)


Barnett, Rt Hon Joel (H'wd)
Ellis, R. (NE D'bysh're)


Beith, A.J.
Eillis, Tom (Wrexham)


Benn, Rt Hon Tony
Einnals, Rt Hon David


Bennett, Andrew (St'kp'tN)
Eivans, loan (Aberdare)


Bidwell, Sydney
Eivans, John (Newton)


Booth, RtHon Albert
Eiwing, Harry


Boothroyd, MissBetty
Faulds, Andrew


Bottomley, RtHonA. (M'b'ro)
Field, Frank


Bradley, Tom
Flannery, Martin


Bray, Dr Jeremy
Fletcher, L. R. (IIkeston)


Brown, B.C. (N'castle W)
Fletcher, Ted (Darlington)


Brown, Ronald W. (H'ckn'yS)
Foot, Rt Hon Michael


Brown, Ron (E'burgh, Leith)
Ford, Ben


Buchan, Norman
Forrester, John


Callaghan, Jim (Midd't'n &amp; P)
Foster, Derek


Campbell, Ian
Foulkes, George


Campbell-Savours, Dale
Fraser, J.(Lamb'fh, N'w'a)


Canavan, Dennis
Freeson, RtHon Reginald


Cant, R. B.
Freud, Clement


Carmichael, Neil
Garrett, John (NorwichS)


Carter-Jones, Lewis
Garrett, W. E. (Wallsend)


Cartwright, John
George, Bruce


Clark, Dr David (S Shields)
Gilbert, Rt Hon Dr John


Cocks, Rt Hon M. (B'stol S)
Ginsburg, David


Coleman, Donald
Golding, John


Concannon, Rt Hon J. D.
Graham, Ted


Conlan, Bernard
Grant, George (Morpeth)


Cook, Robin F.
Grant, John (Islington C)


Cowans, Harry
Hamilton, James (C'tral Fife)


Cox, T. (Wdsw'th, Toot'g)
Hamilton, W. W. (C'tral Fife)


Craigen, J. M. (G'gow, M'hill)
Harrison, Rt Hon Walter


Crawshaw, Richard
Hattersley, Rt Hon Roy


Crowther, Stan
Haynes, Frank


Cryer, Bob
Healey, Rt Hon Denis


Cunliffe, Lawrence
Heffer, EricS.


Dalyell, Tam
Holland, S. (L'b'th, Vauxh'll)


Davidson, Arthur
HomeRobertson, John


Davies, Rt Hon Denzil (L'lli)
Homewood, William


Davies, Ifor (Gower)
Hooley, Frank


Davis, Clinton (Hackney C)
Horam, John


Davis, T. (B'ham, Stechf'd)
Howell, Rt Hon D.


Deakins, Eric
Howells, Geraint


Dean, Joseph (Leeds West)
Hoyle, Douglas






Huckfield, Les
McWilliam, John


Hudson Davies, Gwilym E.
Magee, Bryan


Hughes, Mark (Durham)
Marshall, D (G'gowS'ton)


Hughes, Robert (AberdeenN)
Marshall, DrEdmund (Goole)


Janner, HonGreville
Marshall, Jim (LeicesterS)


Jay, RtHon Douglas
Martin, M (G'gowS'burn)


John, Brynmor
Maxton, John


Johnson, James (Hull West)
Maynard, Miss Joan


Johnson, Walter (Derby S)
Meacher, Michael


Johnston, Russell (Inverness)
Mellish, RtHon Robert


Jones, Rt Hon Alec (Rh'dda)
Mikardo, Ian


Jones, Barry (East Flint)
Millan, RtHon Bruce


Jones, Dan (Burnley)
Miller, Dr M.S. (E Kilbride)


Kaufman, Rt Hon Gerald
Mitchell, Austin (Grimsby)


Kerr, Russell
Mitchell, R.C. (Sotonltchen)


Kilroy-Silk, Robert
Morris, Rt Hon A. (W'shawe)


Lambie, David
Morris, Rt Hon C. (O'shaw)


Lamborn, Harry
Morton, George


Lamond, James
Moyle, Rt Hon Roland


Leadbitter, Ted
Mulley, RtHon Frederick


Leighton, Ronald
Newens, Stanley


Lewis, Arthur (N'ham NW)
Oakes, Rt Hon Gordon


Lewis, Ron (Carlisle)
Ogden, Eric


Litherland, Robert
O'Halloran, Michael


Lofthouse, Geoffrey
O'Neill, Martin


Lyons, Edward (Bradf'dW)
Orme, RtHon Stanley


Mabon, Rt Hon Dr J. Dickson
Owen, Rt Hon Dr David


McCartney, Hugh
Palmer, Arthur


McDonald, DrOonagh
Park, George


McKelvey, William
Parker, John


MacKenzie, RtHon Gregor
Pavitt, Laurie


Maclennan, Robert
Pendry, Tom


McMahon, Andrew
Penhaligon, David


McNally, Thomas
Pitt, William Henry


McNamara, Kevin
Powell, Raymond (Ogmore)


McTaggart, Robert
Prescott, John




Price, C. (Lewisham W)
Stoddart, David


Race, Reg
Stott, Roger


Rees, Rt Hon M (Leeds S)
Strang, Gavin


Richardson, Jo
Straw, Jack


Roberts, Albert (Normanton)
Summerskill, HonDrShirley


Roberts, Ernest (Hackney N)
Thomas, Dafydd (Merioneth)


Roberts, Gwilym (Cannock)
Thomas, DrR. (Carmarthen)


Robertson, George
Thorne, Stan (Preston South)


Robinson, G. (Coventry NW)
Tilley, John


Rooker, J. W.
Torney, Tom


Roper, John
Varley, Rt Hon Eric G.


Ross, Ernest (Dundee West)
Wainwright, E. (DearneV)


Ross, Stephen (Isle of Wight)
Walker, Rt Hon H. (D'caster)


Rowlands, Ted
Watkins, David


Ryman, John
Weetch, Ken


Sandelson, Neville
Welsh, Michael


Sever, John
White, Frank R.


Sheerman, Barry
Whitehead, Phillip


Sheldon, Rt Hon R.
Whitlock, William


Shore, Rt Hon Peter
Willey, Rt Hon Frederick


Short, Mrs Renee
Williams, Rt Hon A. (S'sea W)


Silkin, RtHonJ. (Deptford)
Williams, Rt Hon Mrs (Crosby)


Silkin, Rt Hon S. C. (Dulwich)
Wilson, Gordon (DundeeE)


Silverman, Julius
Wilson, Rt Hon Sir H. (H'ton)


Skinner, Dennis
Winnick, David


Smith, Rt Hon J. (N Lanark)
Woodall, Alec


Snape, Peter
Woolmer, Kenneth


Soley, Clive
Wrigglesworth, Ian


Spearing, Nigel
Wright, Sheila


Spriggs, Leslie



Stallard, A.W.
Tellers for the Noes:


Steel, Rt Hon David
Mr. James Tinn and


Stewart, Rt Hon D. (W Isles)
Mr. Allen McKay.

Question accordingly agreed to.

Orders of the Day — British Aluminium Smelter (Invergordon)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]

Mr. Robert Maclennan: When the news of the calamity of the closure of the smelter at Invergordon broke I wrote at once to the Secretary of State to ask for a full debate in the House on the implications of that closure for the Highland economy and for the Scottish economy. I heard last week only that the Secretary of State was pursuing that possibility through the usual channels.
I also wrote at the same time to ask for an Adjournment debate to raise the issues which are of consequence to my constituents and those in the northern part of the mainland Highland area in the expectation that the Government would not be speedily forthcoming with a full debate. Indeed, that expectation has been fulfilled, as the official Opposition have had to provide a Supply day to enable the subject to be debated fully on Thursday. I welcome that lengthy debate. No doubt many important contributions will be made which will raise issues that it is not open to me to touch upon in the space of a short adjournment debate.
There are, however, important issues which can be raised even in a half-hour debate. There is the crucial importance to the economy of Ross and Cromarty and of Sutherland of the employment offered at the smelter hitherto. Directly as a result of the closure, 890 jobs have been lost, but on the basis of a pronouncement by the Scottish Office, based, I understand, upon an academic study conducted earlier by Aberdeen university, the indirect but nonetheless consequential loss of jobs is about another 600. The total of 1,500 lost jobs in the inner Moray Firth area has the consequence that the closure of British Leyland would have upon the West Midlands.
That is the seismic consequence. Those working at the plant have been endeavouring to draw attention to the seriousness of the position. Mr. Archie McCreevy, Mr. Sandy McNab and their colleagues have most feelingly described the tragedy for them and for those whom they represent. Mr. McCreevy is reported to have said yesterday:
We feel this is an issue which affects the whole of the Highlands—there is no corner that we haven't taken employees from to work at the smelter".
That is true.
So far, there is no sign that the Government will measure up to the scale of the problem. Some questions have already been raised in the House about the precipitate negotiations that preceded the closure on 29 December. What happened is not entirely clear. Conflicting accounts have emanated from the Scottish Office and from the company. However, I shall not dwell on those conflicting accounts more than is necessary to discover the Government's attitude towards finding a new operator for the smelter.
That is the issue that the Government must face. They must throw their full weight behind the task of finding a new operator. From the Secretary of State's comments in the House yesterday in reply to my question and those of others, it is not clear what steps the Government are taking

or what negotiations the Government would enter into with an alternative operator. It is not clear whether the Government are turning over the task of finding an alternative operator wholly to the Highlands and Islands Development Board. In general terms, they have expressed their support for the board's quest for an alternative operator, but that is not enough. We must know more about the terms upon which an alternative operator could hope to reopen the smelter.
The two main factors that have apparently led to the disaster are the recession—the downturn in demand and the price of imported raw materials—and the price of power. There is some doubt about which factor the Government believe led primarily to the closure of the smelter. It is clear that the aluminum industry has been going through an exceedingly difficult period in the past: year. Although that is partly the result of the world recession, there is considerable evidence that in some places there has still been effective growth in output. Indeed, new smelters are being built in some areas. Only on Saturday, the Financial Times reported that Alcoa was entering into a contract arrangement with the Korean Construction Company to build a new aluminium smelter in Perth, Western Australia and substantial output is planned for 1986. There are other islands of prosperity in the industry and, furthermore, as recently as 14 October 1981 in the Financial Times survey and supplement on aluminium, its specialist reporter—Roy Hodson—pointed to the prospects of an upturn in world aluminium demand in the middle 1980s. There seems no reason to believe that those projections are unreal or unlikely.
It must be said that the Highlands and Islands Development Board, which has commissioned its own study—the results of which were announced yesterday—has come to the same conclusion; that the medium-term prospects of aluminium production are good. If that is so, why did die Government allow this, contraction of British aluminium smelting to occur? Would it not have been wiser to seek to come to an arrangement which bridged the period, prior to the upturn in the world economy, when that increase in demand was expected?
The second question over which large doubt remains is, of course, the price of the power. There is no doubt that the company has regarded that as crucial and makes ats position in Invergordon special and apparently different from the position in Anglesey of Rio Tinto Zinc and of the Alcan Aluminium smelter in the North-East. The Government should provide the House with the precise information about what differences there are in the power costs available to the three companies. Why is it that when the Government have spoken of the power costs issue, they have simply said that the cost of power to the British Aluminium is half that available to other manufacturing companies in Scotland?
In itself, that is completely meaningless. The true question must be: what is the cost of power to other smelter operators, both in Britain and abroad? As I understand it, the Commodity Research Unit in London and New York initiated a study into the pricing of power to the aluminium industry in October. Do the Government not have the facts? If not, why not?
The Government's attitude to the issue appears to have been clearly displayed in the short debate that took place


in the middle of the night on 22 July 1981 when the Under-Secretary spoke about the situation. He mentioned the dispute about power costs in that debate between the company and the hydroboard. He said:
The dispute may not be finally resolved for some time.
He continued:
The Government are not a party to the 1968 contract and are not, therefore, directly involved in the dispute.
When answering the speech made by the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), he continued in the same vein:
The contract is a matter for the parties. It is difficult to see how it could be renegotiated unless both parties sought renegotiation. There is no sign that the British Aluminium Company would agree to a renegotiation that would reduce the deficit.
There was certainly never any question of that. Referring to the hon. Member for Stirling, Falkirk and Grangemouth, the Under-Secretary continued:
The terms of the contract are matters for those who, in a previous Labour Government, set out on the path of negotiating a contract in 1968 that would last until the year 2000. As far as one can judge, there it is likely to rest. It seems that it will remain a contract until then."—[Official Report, 22 July 1981; Vol. 9, c. 467.]
What an astonishing turn-up! Instead of the contract lasting until the year 2000, as the Under-Secretary of State predicted, it lies in ruins. It was terminated by the agreement of the two parties without apparently the intervention of the Government to seek to renegotiate its terms.

The Minister of State, Department of Energy (Mr. Hamish Gray): Nonsense.

Mr. Maclennan: The Minister says, "Nonsense." Is he saying that the chairman of British Aluminium in his letter to all hon. Members was not telling the truth? Perhaps the Minister who replies will make that plain. Mr. Utiger, the chairman, said:
It was not possible to negotiate revised terms for power which would make the smelter viable so the company had no alternative but to close the plant or face liquidation.
In amplification of that statement that it was not possible to run the company viably and that apparantly the Government were not willing to renegotiate, Mr. Utiger added:
At no stage did the Government negotiators indicate that they had authority to offer any particular package either short or long term.
If the company did not believe that the Government were in a position to negotiate, either the Government were playing their cards exceedingly close to their chest or the facts are as the chairman suggested and the Government were not willing to make a proposal which the company considered amounted to a renegotiation of the contract and pricing for power which would enable the company to conduct the operation viably. I have no doubt that that issue will be returned to on Thursday.
The £10 million that the Government offered to the Highlands and Islands Development Board, important though it is, will do nothing to replace the 1,500 lost jobs, and the Highlands and Islands Development Board chairman, Admiral Dunbar-Naismith has made that plain. The Government must make it clear that they are willing to allow a contract on power pricing that will enable another company to operate the smelter on terms that are

competitive with those that are available to other companies that are engaged in the aluminium smelting business in other areas and in the rest of western Europe.
Secondly, the Government must make it plain that the site and the plant will equally be available to an operator coming in who is prepared to take them over. These are the two questions that above all the Minister should answer clearly. It is no good saying that the Highlands and Islands Development Board is empowered to go scouring for new operators unless we know on what terms the new operators will be invited to start the work.
What has happened is a potential tragedy. I say "potential" because I still hope that the Government will show the will to avert it.

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): I am bound to say to the hon. Member for Caithness and Sutherland (Mr. Maclennan) that everyone in the House hopes that there may be a prospect of a new operator coming in to Invergordon to start up the smelter, but it would take a better understanding of the facts than the hon. Gentleman has displayed in this short debate before that could possibly come about.
The hon. Gentleman began by referring to the crucial importance of the smelter to the economy in the inner Moray Firth area. No one could dispute the importance of the British Aluminium smelter to the local economy. The repercussions of the closure, as the hon. Gentleman has rightly said, are not restricted to the 890 jobs that are lost as a direct result of the closure. There will be another 400, 500 or 600 jobs indirectly affected in the area as a result of the decision of British Aluminium to cease production at the smelter.
I have been surprised by some of the remarks that have been made by Opposition Members and I wish to make it clear beyond doubt that the decision to close was entirely a matter for the company. The company made that decision after consulting the Department of Industry and the Scottish Office towards the end of last year.
It is because of the damaging effect of the closure on the local economy that in the time available to us we made every effort to avoid closure. The hon. Gentleman quoted from a document that he said he had received from the chairman of British Aluminium. I shall not quote from the document, but refer only to the hon. Gentleman's comments. The document stated that the Government did not show willingness to consider with the company a method of keeping the smelter going in the short term.
If the hon. Gentleman is in any doubt on that matter, I refer him to the joint statement that I made with the chairman of the company earlier this month, when at the request of the trade unions, after I visited Dingwall and Inverness, I had a further meeting with the chairman. The trade unions asked me particularly to do that. Although I told them at the time that I was fully aware of the company's view, I felt, because of the great importance of the matter to the trade unionists, that the least I could do was to have yet another meeting with the company. I make no complaint about that request.
That meeting confirmed the view that British Aluminium does not wish to restart the smelter on its own. It made it clear in that statement that the smelter would be restarted only by a new company. That would mean a new company and a new power contract. To keep the matter


clear, it suggested that it might take a minority interest in a new company, but it would not be the initiator of a venture to restart the smelter. I would not like any hon. Member to be in any doubt about that.
Faced with that situation, the Government have taken up a two-pronged attack on the problem. The first and most urgent is the attempt to find a new operator for the smelter. The second prong is to give extra support to the Highlands and Islands Development Board to help it to extend its activities in advanced factory building, attracting other industry, and in the general activities that it undertakes in the Highlands so that the full effect of the redundancies might be mitigated to some extent.
The hon. Gentleman asked me how the search for a new operator was being conducted. It is being conducted by the Locate in Scotland office, which is based in Glasgow, and which has a network of contacts all over the world. The search is being conducted by LIS in conjunction with HIDB. We are fortunate, as we have a full-time member of HIDB who was a former managing director of the smelter and therefore has direct knowledge and experience of the aluminium business. Therefore, when we say that we are scouring the world to see if another company is interested, we mean just that.
The hon. Gentleman has no right, or any background information, to suggest that the Government's effort is in any way niggardly. The Government are as anxious as anyone else in the House to see if another operator exists. We are also realistic. We insist that it is a long shot. It would be wrong for any of us to build up false hopes in the area. Nevertheless we are taking that long shot and hope that we find a new company.
I now come to the second point that the hon. Gentleman raised. If we find a new company, we are faced with the difficulty of negotiating a new power contract. It would be equally wrong to suggest that one just pushes a button somewhere in the electricity generating boards in Scotland, because the 1968 contract was a disaster. The smelter closed because there was a world recession and it was making losses. However, the greatest single reason for the difficulties facing British Aluminium was the failure of the 1968 contract. I do not make that as a partisan political point.
The Government of the day set up the contract that they thought was best at that time. The company accepted it. It is easy for us to say with the benefit of hindsight that this and that is wrong. Therefore, I make no partisan comment about the contract, but I have to say that the contract failed. In the matter of disputed charges, for example, the contract caused a contingent liability on the balance sheet of the British Aluminium Company amounting to £47 million, which was a great financial embarrassment to the company.
We took the best possible legal advice available to Government, as did the North of Scotland Hydro-Electric Board. The advice that we received—I emphasise this—was that, in view of the terms of the contract, the hydro board had an obligation to the rest of its consumers to pursue the £47 million disputed charges in court. [Interruption.] It may not be in dispute with the hon. Member for Caithness and Sutherland, but it is a matter of which he should be fully aware.
The situation with regard to another power contract is a matter of some complexity. I do not wish on this occasion to try to describe the difficulties that we face, except to say this. The first hurdle, and a significant one, 

will be to try to find a new operator. I must also make it clear that if such an operator is found, there is a further massive hurdle to be overcome in trying to work out a power contract which will produce a viable operation at Invergordon.
The hon. Gentleman asked about the difference in power costs between the Invergordon project and the Anglesey and Lynemouth projects. As my right hon. Friend said yesterday, the Anglesey and Lynemouth contracts are quite different. The Anglesey contract is with the CEGB on terms which are in fact rather similar to those of the Invergordon contract because it is related to Dungeness B nuclear power station. At the moment it is supplied from the grid, but the company has an interest in Dungeness B as British Aluminium had in Hunterston B, so there is a similar contract there. The Lynemouth contract is a coal contract negotiated separately with the National Coal Board.
In each of those cases, the extent of any subsidy that exists is borne by the general consumer in England and Wales, but in Scotland, the Labour Government in 1968—again in an act of fairness to Scottish consumers—said that as the population of Scotland was only 10 per cent. of that of the United Kingdom it would be too heavy a burden to be met by the consumers there and therefore the central Exchequer would pick up the tab in the event, as it turned out, of the pricing requiring Government funding.
Until the date of the end of the contract, quite apart from the disputed charges, £113 million was paid by the Exchequer to the hydro board to reduce the cost of electricity to the smelter, but even with that, it was unprofitable. By any stretch of the imagination, that is a considerable contribution by central Government and by the taxpayer to the project at Invergordon. Yet even after that, the project failed.

Mr. Maclennan: rose—

Mr. Fletcher: I cannot give way. I think that in this short debate the hon. Gentleman has perhaps made points which will allow him at least to ponder before we have a further debate on Thursday. There is little to be gained from raking over the past. The Government are happy to explain what happened and the events that led up to closure. My right hon. Friend did that yesterday. We can repeat the explanations on Thursday, when there will be more time, and answer questions of that kind during the debate.
However, it is important that hon. Members contributing to the debate understand the facts, which are not simple. It is a difficult and complex matter. It is not enough to say that the Government have been uncaring about the project, and that they were not willing to make an effort to keep the smelter going.
The company had a target date of 18 December, and it ran over that date because my right hon. Friend and I, with our officials, were working beyond that date to see whether there was any way at all in which a deal might be struck which would allow the smelter to continue, in the first instance for three years. But the terms of the 1968 contract did not make that possible. That was the company's opinion. Come the end of December, the company's year ended, and it felt it vital to extricate itself from the 1968 contract in order to ensure that the jobs in other parts of Scotland, not least the jobs in Falkirk, but


also jobs in Glasgow, Burntisland, Kinlochleven and Lochaber—2,700 altogether—should be preserved. It was in those circumstances that my right hon. Friend and I were dealing with the problem right up to the end of the year.
I hope that on Thursday, apart from asking any further questions on the history of the case, the House will look to the future—

Mr. Maclennan: That is what the hon. Gentleman is not doing now.

Mr. Fletcher: I hope that by Thursday the hon. Gentleman may have sobered up in this respect and be able

to make a constructive contribution to the debate, instead of rising to make silly points of order, which I see the hon. Gentleman is about to do.

Mr. Maclennan: On a point of order, Mr. Deputy Speaker. The Minister's remark is capable of misconstruction if it is reported. The hon. Gentleman has accused me of not being sober. I hope that he will withdraw that accusation.

Mr. Deputy Speaker (Mr. Bernard Weatherill): I do not think that the Minister quite meant that phrase.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the standing order.

Adjourned at four minutes to Eleven o'clock.